The Australian dollar has been all over the place during the trading session here on Thursday, as the 200 day EMA comes into play. At this point in time, it is highly likely that we will see the market looking towards the 0.65 level to see if there is going to be enough support. If we break down below that level, then it will go looking towards the 50 day EMA underneath. A breakdown below that level could truly accelerate the downside. One thing is for sure, we are definitely at a major inflection point.
AUD/USD Video 22.05.20
The Australian dollar of course is going to be sensitive to the Chinese trade situation, and although China is back to work, the reality is that demand is still a huge question. Furthermore, 100 million Chinese have just been locked down again due to a significant outbreak of coronavirus again, so the question now is whether or not that continues. If it does, that would obviously be extremely negative and therefore eventually the market may start to focus on that.
However, if we get a break significantly above the 200 day EMA, it is likely that this trend will have changed, and we probably go much higher for the longer term. Ultimately, this is a market that has been quite resilient, so anything is possible at this point. Markets have become completely disconnected from economic reality, but I suppose the bullish argument here is probably due to the Federal Reserve flooding the market with US dollars.
This article was originally posted on FX Empire
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