Australian Dollar Pops Heading Towards Federal Reserve

The Australian dollar has rallied a bit during the trading session on Wednesday to break above the 50 Day EMA. The market had formed a very neutral candlestick during the previous session, and therefore it is likely that the break above there pulled more buyers back in. That being said, we are still very much in a trading range, and therefore I think that we have a bit of a ceiling above near the 200 Day EMA, and then the 0.7350 level.

AUD/USD Video 17.03.22

The noisy behavior that we have had over the last couple of days will probably continue, because the Australian dollar is so highly levered to commodities, and of course, we have to worry about the greenback and where it happens with the FOMC, and whether or not the Federal Reserve is looking to be hawkish going forward.

A lot of this is going to come down to whether or not we are going to see further fear come back into the market because that in and of itself could drive the US dollar higher, thereby putting a little bit of an anchor around the neck of the Aussie. If we were to break down below the neutral candlestick of the Tuesday session, I believe the market then goes much lower, perhaps reaching towards the 0.71 handle or even the 0.70 level.

I believe that if we were to break above the 0.74 handle, then it is possible that we could go looking towards the 0.75 level. The 0.75 level is an area that has been important multiple times in the past, so I would look at that as a significant battle just waiting to happen.

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