- In my daily analysis of the Australian dollar, it’s easy to see that there is a lot of positivity to this currency market right now, and I think it’s probably only a matter of time before we see market participants continue to punish the US dollar, due to the fact that CPI numbers have come out cooler than anticipated.
This suggests that inflation is starting to fall in America, and that should, at least in theory, have the Federal Reserve cut rates sooner rather than later. Wall Street is already taking the ball and running with it, suggesting that interest rates are going to be happening in September and December. Whether or not that is true remains to be seen, but this is a market that has given back about half of the gains during the session.
CPI Floored the Greenback
After the shock announcement that the consumer price index fell significantly. All things being equal, we had recently broken out of a triangle and that does suggest that there is momentum building in this market. There’s a good chance the number was leaked prematurely and ahead of time. That seems to be the way the games are played. And therefore, we saw the Australian dollar show strength early.
Whether or not the AUD/USD analysis can hang on to this remains to be seen, but it certainly looks like the Aussie is going to try to drive toward the 0.6850 level above. That’s an area that I think will continue to attract a lot of attention, and therefore I think maybe just a bit of resistance will come into play there. Ultimately, I do think this is a market that probably continues to be noisy, but with the upward trajectory being firmly ensconced at this point, I don’t have any argument for trying to short this pair. The 0.6650 level, which also has the 50 day EMA attached to it now, is your floor in the market.
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