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MENAFN- Daily Forex)
The Australian dollar try to rally in the early hours of Thursday, only to turn around and show signs of weakness. All things, this is a market that I think continues to struggle for longer term direction, but at this point in time, the market is obviously in the consolidation area that we have been struggling with for some time. The consolidation area does make a certain amount of sense considering when you think about everything that drives the Australian dollar.
The Australian dollar obviously is driven by what happens in China, as the Australians are heavily influenced by demand coming out of China for their commodities and the like. Furthermore, the Australian dollar has sensitivity when it comes to global growth in general, as China is a major manufacturer for the rest of the world. In other words, if China is building more“things”, they need more Australian commodities.
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That being said, the situation in China is not necessarily 100% rosy at the moment, and therefore you would have some questions when it comes to whether or not Australia will continue to strengthen, or if we will see weakness.
EURUSD Chart by TradingViewTechnical Analysis
The technical analysis for this market is fairly neutral in the short term, as the 200 Day EMA obviously will attract a lot of attention and of course is flat. If that remains the case, then I think you got a situation where the market just simply kill time here. The range that we have been in for some time is the 0.65 level above, and the 0.6350 level underneath. The 0.6350 level also features the 50 Day EMA, which of course will attract a certain amount of attention as well. In fact, if we were to break down below there then I think you probably see the Australian dollar fall apart, and this would probably have more to do with the US dollar strengthening against most things around the world, not just this particular currency. In other words, I think this is all about the greenback more than anything else as we had gotten so oversold in the US dollar.
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