The Australian dollar has stabilized after initially falling during the day on Friday, reaching down towards the 0.7350 level. This is an area that is important on the longer-term charts, and I think there is quite a bit of supply being chewed through in this area as we have formed several hammers in a row on the weekly charts. I think that ultimately the market will continue to go back and forth, with a lot of interest in this area. However, if we were to break down below the 0.73 level, then the market will unwind drastically and could drop as low as the 0.70 level.
Market participants will continue to react upon headlines, and you should keep in mind that the Australian dollar is highly sensitive to what’s going on in Asia, which of course is highly influenced by the trade tariff talks. If things calm down, that should be good for the Australian dollar, and of course the opposite would be true. I believe that overall though, people are trying to lift this market, so I believe that the path of least resistance is to the upside, at least in the short term. Having said that, if there some type of major escalation of trade war fears, then of course the Australian dollar could get punished for that exact same reason. The gap from the open of the week has not been filled yet, so that’s another reason to think that perhaps we will see resiliency.
AUD/USD Video 16.07.18
This article was originally posted on FX Empire
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