The month of May could be interesting for the Australian dollar, as we have seen a lot of bearish pressure on it. After all, it is a conduit in which a lot of currency traders will base their Chinese assessments on. We have recently seen Donald Trump tweeted about more tariffs, and of course the negotiation between the Americans and the Chinese haven’t exactly gotten off to a roaring start. That being said, it’s very likely that we are going to continue to see technical analysis take a huge part in this pair, and as we are sitting on top of a major area I think that it’s very likely we will continue to see markets respect this region.
I believe that the 0.70 level is crucial for support, but I think even more importantly is that the market finds support all the way down to the 0.68 level, so I think that this pair continues to be the same that it has been for some time now: you can only buy the AUD/USD pair, not sell it.
This isn’t to say that you will necessarily need to be long in this market at all times, it’s more about the US dollar at this point than anything else. If the US dollar is gaining against most currencies then I would stay away from this market. I wouldn’t short it, because quite frankly it’s going to take a lot of effort to break down through that blue box I have on the chart. On the other hand, if the US dollar selling off then this might be one of the first places you look for a quick trade. I believe that things will remain the same until we get some type of resolution to the US/China trade agreement, which could then have this market looking to break above the 0.7250 level and to much higher levels.