The Australian dollar pulled back a bit during the trading session on Tuesday, but then shot above the 50 day EMA. That is an extraordinarily important moving average, but I believe that the 0.70 level above is much more important, as it is a large, round, psychologically significant number and the scene of selling pressure previously.
AUD/USD Video 26.06.19
With all of that being said, we are heading towards the G 20 this weekend, which of course will focus on the US/China trade talks. Signs of exhaustion should be taken as nice selling opportunities as long as we can stay below the 0.7060 handle. At that point, we could change the entire trend if we break above there, but between now and then I would not be surprised at all to see this market get exhausted. I think some of the sellers have done a bit of short covering heading towards those crucial meetings between the Americans and Chinese, which will obviously move the Aussie as Australia is a major contributor to the Chinese economy as far as raw materials are concerned.
That being said, if there’s any disappointment at all the Australian dollar will turn right back around. At this point, it’s very likely that the talks will disappoint, and quite frankly I think it’s only a matter of time before we break down again. That being said, the 0.68 level underneath is massive support so I don’t know that we break through there, but I do think that we are getting a bit overextended heading into what is a wildcard.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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