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MENAFN- Daily Forex)
- During my daily analysis of the major currency pairs, the Australian dollar captures my attention due to the fact that we have formed yet another nasty looking candlestick at the end of the day.
- With this, I think we need to pay close attention to the fact that money is flowing from Asia into North America, specifically the United States.
- Furthermore, the 10 year yield in America spiked yet again during the trading session on Tuesday, and that makes the US dollar much more attractive as yields in America outperform Australia, and quite frankly most other places.
Technical Analysis
The AUD/USD technical analysis of course looks very negative and has for quite some time. The 0.6350 level above is an area that's been important multiple times, and I think that the 50 Day EMA racing toward it will also offer quite a bit of a ceiling as well. With this being the case, I think you still see a“fade the rally” type of situation in this pair, and I think the 0.62 level underneath is still going to be significant support. If we break down below there, then it's likely that the market could go looking to the 0.60 level underneath, which is a large, round, psychologically significant figure, and an area that has previously been important.
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I have no interest in buying the Australian dollar, and quite frankly if I wanted to short the US dollar, it would not be against this dying currency. While I do think it will turn around sooner or later, unfortunately for Australia it is highly levered to what's going on in China, and quite frankly the Chinese economy does not look healthy. Bond yields in China are collapsing, while they are rising in the United States. This is a proxy for that argument, and with that being the case I think you've got a situation where the downtrend should continue, but I look at rallies as opportunities.
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