Australian Dollar Momentum Turns Down, Risks of Further Declines
A relatively empty week of economic event risk will likely leave the AUD at the whims of broader financial trends, and choppy price action makes it especially difficult to time equity markets and the Australian Dollar itself. The S&P had previously racked up respectable gains on relatively illiquid summer trading. Yet Friday’s price action saw the index shed the previous week’s worth of appreciation and then some—warning that bulls are growing tired and bears may soon take control of price action. It serves to note that the reversal comes at a trendline connecting April and June highs, and a re-test of trend channel lows could mean a decline towards the 1000 mark. Needless to say, such a move would almost certainly coincide with Australian Dollar declines and it will be critical to watch the index’s next moves.
One day of declines does not make a trend, but the market’s warning is clear. Whether or not the Australian Dollar can continue higher may depend on the next several days of price action and whether it can recover following Friday’s sizeable decline. . - DR
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.