The Australian dollar has rallied significantly during the course of the week to reach towards the 50 week EMA. If we can break above there, then the market will certainly target the 0.75 level, an area that of course is psychologically important, and an area where we have seen a bit of noise previously. Because of this, I think that the market will look at that as a major breakout, and it could send the market looking towards the 0.78 level.
Pullbacks should continue to see plenty of support, especially near the 200 week EMA. If we were to break down below there and wipe out the candlestick from this past week, then it would change my mind, but it is clear that we have seen a lot of momentum shift to the upside during the week, and therefore think it is probably only a matter of time before we get a little bit of follow-through.
AUD/USD Video 18.10.21
The US dollar itself is starting to get hammered, but the Australian dollar may be a little sluggish in comparison to some of the other commodity currencies due to the fact that the Australian economy is still close in various places. Furthermore, you have to worry about China at the same time, which is starting to show serious stress, and of course Australia is highly sensitive to what goes on in the Chinese mainland.
With all of this, I am somewhat optimistic, but I need to see the 0.75 broken to the upside to be aggressive for a longer move. The markets have been extraordinarily noisy, but it looks like we are turning against the greenback after what has been a very strong pullback.
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This article was originally posted on FX Empire