The Australian dollar has gone back and forth during the trading session on Tuesday as we continue to dance around the 0.6450 level. This is an area that has previously been both support and resistance. So, I would expect a lot of market memory here, but even if we were to break above here, we are still very much in a downtrend and keep that in mind. Signs of exhaustion will be shorting opportunities that I think a lot of people would be willing to take advantage of as the US dollar has been strong for multiple reasons, not the least of which would be that the Federal Reserve is likely to continue to stay tight for the foreseeable future.
If that’s the case, then the US dollar should strengthen. Ultimately, I think this is a market that will have to deal with the 50 day EMA as a bit of a ceiling. On the other hand, though, if we break down below the bottom of the candlestick for Tuesday, then it’s likely that we drop down to the 0.64 level. Anything below the 0.64 level opens up the possibility of a move back down to the 0.63 level.
