The Australian dollar is caught just above the .74 cents level despite weak performance of the US dollar against other currencies.
“The Aussie dollar bulls must be wondering why the Aussie couldn’t get past the .7466 level after a chronically sick US dollar and very solid employment data yesterday,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
He added that the Aussie’s sluggish performance was made worse when the US dollar had a slight recovery overnight.
“Given the current environment – stocks rallied but it wasn’t much of a bounce – it’s not unusual that the Australian dollar remains pressured and still underperforming on the crosses,” McKenna said.
He added, “global investors and traders have a tendency to trim their sails in times of heightened uncertainty and high stress means that they cut back on non-core or non-benchmark positions like the Australian dollar.”
“And it doesn’t help that market funks usually come with a concern about the overall outlook for risk assets and often the economy.”
At the moment, it leaves the Aussie dollar struggling a little this morning after what looks like a bearish candle for the previous day’s trade.
According to McKenna, technical indicators show that a break of 0.7405 could be the catalyst for a deeper move.
“Naturally, the recent low at 0.7385/90 is the next level to watch and if that breaks, we could be looking at the 0.7330 level.”
On the top side 0.74450 is again the level to watch and if the Aussie can break through that, then it could go to the 0.7466 level.
With the OPEC meeting next week, it may be relatively quiet next few days in the markets, according to McKenna.
“This means positive catalysts might be lacking,” he said.
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