The Australian dollar has shown signs of erratic behavior over the last 24 hours but this should not be a huge surprise considering that we continue to have mixed messages coming out of the trade war between the United States and China. However, part of the resiliency that we are seeing is the fact that the Chinese suggested that the Americans were willing to peel away some of the tariffs that were scheduled to be levied upon them in signs of renewed conciliatory tone. The better the tone coming out of the trade war, the better the Australian dollar will do going forward, mainly due to the fact that the Australians provide China with much of its raw materials.
AUD/USD Video 08.11.19
As China is Australia’s biggest customer, it makes sense that paying attention to the trade wars paramount when it comes to trading the Aussie dollar. That being said, it’s very likely that we continue to see a lot of mixed messages, so I would not expect a major breakout one direction or the other. We are sitting just below the 200 day EMA which of course causes resistance, just as the 61.8% Fibonacci retracement level will. However, if the Americans and the Chinese make concrete moves forward, that could cause this market the bus through that area and go looking towards the 0.71 handle. It’s not until we get a daily close above the 200 day EMA that I would be convinced though, and at this point we aren’t anywhere near it. Expect more back-and-forth trading.
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This article was originally posted on FX Empire
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