The Australian dollar rallied significantly during the trading session on Tuesday initially but found enough resistance at the 0.68 handle above. However, we have pulled back from there as we continue to see a lot of issues when it comes to the US/China trade relations. After all, the Americans labeled the Chinese “currency manipulators” which of course is the next step higher in the currency wars. Beyond that, this is a market that is oversold but quite frankly the fact that we can’t get above the 0.68 level tells you just how negative people have gotten when it comes to the US/China trade situation.
AUD/USD Video 07.08.19
At this point, it’s very likely that we are going to go lower at this point, perhaps looking towards the 0.65 handle. That’s an area that is a large, round, psychologically significant figure, and therefore I think it will attract a certain amount of attention. Ultimately, this is a market that I think is falling apart for several reasons. Looking at this chart, if we reach towards the 0.69 level above, there will be even more resistive. I think every 50 pips or so you will continue to see trouble.
At this point in time, it’s very likely that the market is oversold, but quite frankly nobody seems to care. Overall, the US dollar should continue to strengthen due to the fact that there are a lot of geopolitical concerns, and of course there is a significant amount of concern when it comes to the Chinese economy. All things being equal, treasury markets continue to attract a lot of money, so therefore this pair should continue to drop as well.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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