I think that gravity will eventually come back into the picture, but it is probably going to be a short-term event.
The Aussie dollar rallied significantly on Friday to reach towards the 200-day EMA. As you can see, the 200-day EMA has been pierced but we pulled back just a bit from there. There is a significant amount of resistance just above, and you could probably make an argument that because the 0.75 level sits just above, we probably have some sellers waiting to get involved. You can also make an argument for the market being way overbought at this point.
The jobs number in the United States came in at 500,000 less than anticipated, and that certainly worked against the value of the greenback. Further compounding the upward pressure is the fact that the Australian GDP numbers were gangbusters during the week, so at this point it does make sense that the Australian dollar will continue to find buyers. However, I think at the very least we will probably get a short-term pullback. Whether or not we can break down significantly is a completely different question.
If we were to turn around and break above the 0.75 handle, then the market is likely to go looking towards the 0.76 level. At that point, I think we would continue to see resistance, but one thing that I do see for sure is that we have seen a huge move recently, so we will probably have follow-through. But at this point, being overbought does suggest that we have to struggle.
If we do break down below the 0.73 level, which obviously would be a big move, then it would show that the market is ready to go much lower. Because of this, the market would need some type of catalyst to break that barrier, but we could see a sudden reversal of fortune if people start to worry about the recovery due to the jobs number from America. You should also pay close attention to the fact that Monday is a major holiday in both the United States and Canada, so liquidity might be a little bit of an issue. At this point, I think that gravity will eventually come back into the picture, but it is probably going to be a short-term event.