(MENAFN- Daily Forex) The Australian dollar initially rallied on Wednesday but gave back gains to form an inverted hammer in an area that looks a lot like a base being formed. Because of this, it is a bit difficult to put a trade on right now, especially considering that the jobs numbers comes out on Friday. This will obviously have a major impact on what happens next in the market, as it has such a huge influence on the greenback itself. Because of this, I think the next couple of days could be a bit quiet, but it is worth noting that Jerome Powell did not say much during Wednesday to change the outlook for the Federal Reserve to be fighting inflation.
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If we were to break down below the bottom of the Tuesday session, that would obviously be a very negative turn of events for this pair. At that point, I would anticipate that we could go running towards the 0.70 level. That being said, Thursday is the day before non-farm payroll, so it is probably not the day to expect big moves. To the upside, we have obvious resistance right around the 0.7170 level. That is where we have stopped the last couple of days, so it is worth noting that general vicinity.
Keep in mind that Australia is highly levered to the commodity market, which has taken a little bit of a beating over the last couple of days. If that is going to continue to be an issue, that will certainly work against the value of the Aussie itself. Nonetheless, I do anticipate that we could get a little bit of a bounce in the short term, if for no other reason than the simple fact that we are oversold. The 0.72 level probably offers resistance as well as the 0.73 level, especially now that the 50-day EMA is sitting in that same general vicinity. I expect a quiet session on Thursday, and then chaos and choppy behavior on Friday as the announcement comes out. Between now and the announcement, any catalyst would probably be a bit of a surprise, although certainly not an impossibility. Pay attention to China, because China and the Australian dollar are inevitably linked when news comes out of the mainland.
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