The Australian dollar fell during trading on Monday, as the crucial 0.70 level has offered resistance yet again. With that in mind, I believe that the market participants will continue to look at this area as massive resistance, and therefore this reaction should not have been a huge surprise.
From here, it’s possible we could see a move down to the 0.69 level, or possibly consolidation. That consolidation could have this market looking towards the 0.70 level again, which would also be an area of negativity and potential selling. In fact, that area seems to have resistance built in all the way up to the 0.7060 handle.
To the downside, I believe that a move below the 0.69 level will be a bit hard to accomplish, because quite frankly it looks as if we are trying to form some type of bottoming pattern. This may seem a bit counterintuitive as the US/China trade talks drag on, the Australian banking sector has a lot of issues just waiting to come to the surface, and of course the Australian housing market is in some trouble. However, with the Federal Reserve pivoting towards more of a dovish stance, focus may be shifting to the Greenbank and not so much everything else. If that’s going to be the case then the Australian dollar will be somewhat supported. Don’t get me wrong, this isn’t going to be my favorite currency or anything but it also will move right along with the other currency markets the feature the greenback. The Federal Reserve shifting the way it has is a huge deal. This doesn’t happen every day, so that of course will catch a lot of attention. To the downside, if we were to somehow break down below the 0.68 level that would be catastrophic for the Aussie, but it looks less likely as time goes on.