The Australian Dollar rallied slightly during the trading session on Wednesday as the US dollar has continued to soften in general. That being said, a pullback could happen at the first signs of risk appetite failing.
AUD/USD
The Australian Dollar rallied slightly during the trading session on Wednesday as we continue to see a lot of noisy behavior and a significant turn of events as we have been sideways for a while. All things being equal, this is a market that is above the 50-day EMA, and the market continues to grind to the upside as the US Dollar continues to soften in general. The CPI numbers came out as anticipated on Wednesday, and as a result, any fears of the Federal Reserve suddenly getting tighter probably disappeared.
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Ultimately, this is a market that short-term pullbacks end up offering potential buying opportunities, especially near the 50-day EMA at the 0.7016 level. The 0.7150 level above is a potential target, and it's an area that's been very difficult to overcome. If the market were to fall down and break down below the 50-day EMA, then the 200-day EMA sitting just below the 0.6950 level is a potential floor. This is an area that if we were to break below, it would be a bad sign for the Aussie in general.
Technical Targets and Macro Drivers
The interest rate differential favors the US Dollar ever so slightly, but it's not enough to turn traders back around. Australia is also a proxy for China, but perhaps more importantly, gold and other commodities. And as a result, I think you're just going to continue to see a very slow grind in this market unless something changes quite drastically, which, of course, would probably come out of the Middle East in the form of some type of increased hostility.
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