Baxia Markets
June 20, 2023

Australian Dollar Retreats as Traders Eye Key Levels

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In the latest trading session, the Australian dollar experienced a slight pullback, prompting traders to observe an important area near the 0.68 level, which had previously acted as a resistance. The market's ability to surpass this level suggests that it could serve as a potential entry point for an upward trend. Traders are considering the notion of "market memory" coming into play at this juncture. Additionally, just below the 0.68 level, the 200-Day EMA awaits, garnering significant attention from market participants.

Australian Dollar


On the upside, attention is drawn to the 0.69 level, which has held importance in the past. However, it is increasingly likely that the market will attempt to breach the 0.70 level in the near future. This level holds particular significance due to its round number and psychological impact. Traders perceive it as both a target and a potential resistance. Recent news of a surprise interest rate hike by the Reserve Bank of Australia has further enhanced the appeal of the Australian dollar compared to the US dollar. The Federal Reserve's decision to pause its rate hike cycle last week has also contributed to the Australian dollar's relative strength. Whether this trend will persist in the long run remains uncertain, but currently, traders are showing a greater focus on the Australian dollar rather than the US dollar.


Australian dollar's performance heavily relies on risk appetite

A breakdown below the 200-Day EMA could lead to a decline in the market, possibly reentering the previous consolidation range. The volatility witnessed in the market over the past couple of weeks is evident as prices soared rapidly. Ultimately, the Australian dollar's performance heavily relies on risk appetite, as it is greatly influenced by market sentiment and the broader commodity markets. It is worth noting that the previous Friday session displayed a hesitation candlestick pattern, suggesting a return of gravity to the market.


At the end of the day, the Australian dollar faced a modest setback in the recent trading session, prompting traders to closely monitor the 0.68 level as a potential entry point for an upward trend. The 200-Day EMA lies just below this level, attracting significant attention. Conversely, the 0.69 level stands as a notable resistance, while traders anticipate a potential move toward the psychologically significant 0.70 level. Recent interest rate differentials between the Reserve Bank of Australia and the US Federal Reserve have influenced the Australian dollar's appeal. However, market dynamics and risk appetite remain crucial factors in determining the currency's future trajectory. The market's volatility over the past weeks emphasizes the need for careful observation and analysis.

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