I will be watching this market quite closely at this point and could be setting up for a huge swing trade.
The Australian dollar fell a bit on Wednesday as we see a continuation of the shock to the markets after the FOMC statement suggested that the Federal Reserve is going to be much more hawkish than initially expected. Because of this, the US dollar strengthened, and it looks as if the Australian dollar is taking it on the chin. The market is trying to break through the 0.75 handle, and if it breaks through the 0.7450 level, it will have completely wiped out all of the potential reactions to the RBA statement.
The Australian dollar has been ripping higher for quite some time, so it will be interesting to see whether or not reactions continue to follow commodity markets higher, but it is worth noting that commodity markets have been hit as well. Ultimately, this is a market that I think will continue to see a lot of trouble ahead, and now we have the 0.75 level offering even more in the way of potential trouble, as we now will have to figure out whether or not we are going to hold the uptrend intact, or if we are going to turn things around.
There are a lot of concerns when it comes to the overall global economy, and that is one thing that you should keep in the back of your mind when you are looking at the Aussie dollar. If global growth suddenly stops, that would be extraordinarily negative for most assets with perhaps the exception of the US dollar. With that, I think that it is probably only a matter of time before we have to make some type of a longer-term decision, so the next couple of days are going to be crucial. At this juncture, if we were to break down below the 0.7450 level, that could open up a massive wave of selling. I will be watching this market quite closely at this point and could be setting up for a huge swing trade. Ultimately, if we turn around and clear the 0.7550 level to the upside, then it is possible that we could continue the overall uptrend. I suspect that the Thursday and the Friday sessions both are going to be very important. The next couple of days could determine the longer-term trend for this market.