The Australian dollar has rallied a bit during the trading session on Thursday to break above the 200 Day EMA, but now is running into a significant amount of resistance near the 0.74 handle. Breaking above there would perhaps open up the possibility of a much bigger move. However, it will be interesting to see whether or not we can break through there, because there are so many moving pieces right now that it is difficult to be confident enough to hang on to a growth pair.
AUD/USD Video 18.03.22
The last couple of days have been very strong, so a pullback would make a certain amount of sense, especially as we head into the weekend. That being said, it does it necessarily mean we have to, just that it would make a certain amount of sense. A pullback to the 200 Day EMA would be the most likely of outcomes, but if we were to break down below there, we likely go looking towards the 50 Day EMA.
I believe that the most likely outcome is more choppiness because we have to worry about growth and the Federal Reserve raising rates at every meeting. Commodities are lifting the Aussie dollar at the moment though, so pay close attention to the commodity markets in general. If we have a pullback in commodities, that will almost certainly put downward pressure on this pair, as the Aussie is a proxy for hard assets being exported from that country. Furthermore, the Australian dollar is also a proxy for Asia, so that needs to be watched as well.
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This article was originally posted on FX Empire