Australian Dollar Rises Despite Inflation Numbers

The Australian dollar has shot higher during the trading session on Thursday, despite the fact that the CPI numbers in the United States suggests that the Federal Reserve will have to aggressively tighten. Having said that, I am sure that somebody will come up with a reason after the fact as to why that happened. Nonetheless, we have seen a complete reversal in risk appetite midday, so at this point in time I think the only thing you can count on is that there is going to be a lot of volatility.

AUD/USD Video 11.02.22

The Australian dollar of course has broken above the 0.72 handle, so that is a good sign, but we still have a lot of noise in this general vicinity. While this is a nice “V-shaped bottom” that we have formed, I am not really convinced until we break above the 200 day EMA that we can be longer-term holders of the Aussie dollar. Obviously, something has changed in the psyche of traders, and I am sure that there will be reports on why everything flipped around during the day after an initial selloff, but ultimately this could have something to do with Australia reopening and people finding this as a potential value play.

The 0.70 level underneath has been massive support for ages, so it is not a huge surprise to see that we formed a double bottom in that area. Now the question of course is whether or not we can take out the 200 day EMA which would be a confirmation of a complete trend reversal and could send this market much higher over the next several months.

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