Support for the Australian dollar can be found at the 200-day EMA, near the 0.6750 level.

  • The AUD/USD is making significant waves in the forex market, especially recovering during the Wednesday trading session.
  • The currency appears to be nearing the critical 0.68 level due to a number of factors, the most important of which is the surprise rate hike by the Reserve Bank of Australia.
  • The move has injected some measure of optimism into the market, which has further strengthened in anticipation of Wednesday’s Federal Reserve meeting. Given this confluence of events, the market was unsurprisingly marked by increased volatility.

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The question on investors’ minds is whether the Australian dollar can break and stay above the 0.68 level and sustain its recovery. If possible, the probability that the market will rise even higher is high, possibly leading to a rise to the 0.70 level.

Notably, the currency has seen a parabolic trend over the past few weeks. This rapid rise may trigger a pullback as market dynamics try to rebalance. The absence of such a pullback so far has been surprising, but the Federal Reserve’s decision at its meeting on Wednesday could catalyze a market shock that could potentially lead to a correction. The market currently seems to assume that the Australian dollar will continue to rise; a perception that could be misleading given the Federal Reserve tendency to slightly overexcite the market. However, the market’s reaction to the Federal Reserve’s attempts to steer its course has historically been unpredictable, making the outcome uncertain.

Support for the Australian dollar can be found at the 200-day EMA, near the 0.6750 level. Should the currency break below this point, a decline down to the 0.66 level, the previous consolidation area, becomes likely. Conversely, if the Australian dollar manages to climb above the 0.68 level, the prospect of reaching the 0.70 level is increasingly likely. A break of this point would signal an aggressive uptrend.

Ultimately, the current state suggests a scenario full of extreme noise. Caution is therefore advised for traders and investors navigating the forex market during these volatile times. The Australian dollar’s performance in the coming days will largely depend on the Federal Reserve’s actions and the market’s reaction to those actions. As always in the world of FX, it may be crucial to pay close attention to the announcements in the coming days.


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