The Australian dollar initially pulled back a bit during the trading session on Tuesday, but after the RBA announcement came out, traders felt confident enough to jump in and start buying the Aussie again. Furthermore, the Chinese have released strong numbers, the market is likely to continue to look at the Australian dollar as a proxy for the Chinese economy, which is humming right along. With that being the case, I do believe that we continue to see a “buy on the dips” type of scenario here, so therefore there is no need to try to short this market. I believe that the 50 day EMA underneath is going to continue to offer plenty of support, which is currently just above the 0.71 handle, which is also supported. In other words, we have plenty of buyers underneath that should continue to show signs of demand.
AUD/USD Video 16.09.20
To the upside, if we were to break above the 0.74 handle, it is likely that we could go to the 0.75 handle, perhaps even the 0.80 level that would make for a nice longer-term target. Having said that, if the global economy starts to rollover, that will certainly have a negative effect on the Australian dollar, so that would probably be your biggest concern if you word long of the Aussie. As far as selling is concerned, I do not really have any interest in doing so right now, because quite frankly there are other economies out there that would be much more vulnerable to the global slowdown, perhaps the European Union, and most certainly the United Kingdom. If you are looking to short a Pacific currency based upon global concerns if you are probably better off with the New Zealand dollar.
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This article was originally posted on FX Empire
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