The Australian dollar has fallen a bit from the crucial 0.70 level, as we have seen many times before. With the CPI numbers due on Wednesday, it is likely that we will see some kind of bigger move. If the index number is stronger than expected, which will be higher than 5% per month, that may push this market to the downside.
On the other hand, if we turn around and break above 0.7050, Then it is most likely due to the CPI reading being lower than expected. In that scenario, market participants will likely do everything they can to convince themselves that the Fed will ease monetary policy. While that may ease the tightening a bit, the truth is that we are still in a bearish trend, and for a number of reasons.
When you look at the commodity markets, we see that they are generally being sold, which of course puts a bit of negativity into the Australian dollar. I think with time we will probably try to test the dips again, but I don’t necessarily think this is a market to buy. And theBut there are some levels above that might cause some problems anyway. Not the least of these levels, of course, will be the 200-day moving average, which is currently below the 0.72 level.
If we turn around and start to break down, the 0.69 level is an area where I expect a lot of support, and if we break below that level, then we will almost certainly try to go back towards the 0.67 level. Remember that a lot of economic and inflationary noise will disrupt this market at best. The 50 day EMA is in the middle of the consolidation zone we are going through right now, So that will attract volume with algorithmic trading as well. All things being equal, I believe this market is going to be choppy and therefore difficult to trade. But we should get some clarity by the end of the Wednesday session, so tomorrow’s analysis is likely to be more convincing.
The chart was generated by . platform TradingView