Aussie shows resilience, eyeing 50-day EMA. Key resistance at 0.6625, with potential support at 0.6450 amid Fed rate speculation.

• During Tuesday's trading session, the Australian dollar slightly declined at first, but it later recovered and began to show signs of strength once more.
• Having said that, the market appears prepared to target the 50-day EMA and, if necessary, the 200-day EMA.

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I predict that the 0.6625 level will be closely watched as resistance because a break above it would represent a significant victory for the Australian bulls. We'll have to wait and see, though, as the 0.65 level has historically seen a lot of activity if we reverse course and collapse. The most recent swing low is at 0.6450, so naturally, it should also be supported if it stays there.

Down Below, We Have to Watch

Since many people are counting on the Federal Reserve to cut rates later this year, the Federal Reserve naturally has a lot of effect over the value of the US dollar. We'll have to wait and see, though it's important to note that the timing for that has been moved back a little. There will be a lot of noise and choppiness, that much is evident from the chart.

The Aussie is going to lose it all if we collapse below that point, and we'll find ourselves at the 0.63 level quite fast. This kind of currency combination is often considered to be risk on, risk off. Therefore, keep that in mind as traders will be watching the Chinese economy for clues on where the Australian dollar might go. Because support and resistance are spread out in roughly 50 pip increments, which does not leave us with much room to maneuver, you must therefore be aware that this is likely going to be a short-term trader's sort of market. For this reason, the Australian dollar is probably not going to be the pair for you, at least not right now, unless you are a short-term trader.

The Aussie is highly sensitive to a lot of external factors, so you need to always practice stringent risk management with this pair, and recognize that the influence can come from just about anywhere so therefore stop loss orders are crucial, and in this choppy environment they are even more so.

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