The Federal Reserve said its word and it was dovish. The central bank did not raise rates and lowered projections. While a rate hike is still on the cards this year, the Fed decided to wait mostly because of China, Australia’s main trade partner. The Fed is still on course to hike in 2015, but for now, the situation is calmer.
And that certainly helps the Australian dollar, which shot higher. The Australian dollar is a commodity currency that attracts money when the mood is more positive. But is it enough? The Aussie had many positive days and it may begin running out of steam. Here are levels to watch on both sides of the current trade.
Update: it seems that the mood has soured and the Aussie loses to safe haven currencies such as the yen and the euro.
AUD/USD jumped to 0.7275, around 100 pips from the pre-Fed levels. It has retreated since then and stands at 0.7220.
0.7370 is a level to watch on the upside, but the real level of resistance awaits at 0.7440. Above the very round number of 0.75, we find 0.7515.
On the downside, we find 0.7215 as a line of struggle. Real support awaits only at 0.71, and key support is at the round number of 0.70.
Here is the chart:
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