AUDUSD (DXY Adjusted) 2020-JUL-24

Something I often look at but rarely discuss, is the ability to stabilise the underlying fluctuation in a FOREX pair by introducing DXY as an offsetting pairing. While this should have no impact on trading decisions you make - which should absolutely factor in flux on both sides of the pair - this is a great way to get a clean read on how the non-US side of the pair is internally trending. That is, how is it's trend performing against a non-fluctuating US value.

By doing so, we can better understand the local impacts that apply to the pair; as well as the overall global impact.

For the adjusted AUDUSD; here we can see that the spot is at a critical position that has seen both rallies and rejections. A potentially very important point on the chart.

However, if we don't factor in the recent weakness in the DXY, it could be assumed that the price has rallied through the resistance and is pushing to new local highs:


With a horrific economic outlook; near-0 interest rates for the long term; and a hidden unemployment disaster - there is no reason for the value of AUD to be soaring. That said, the situation is still better than the current US outlook; as is explained by the weakening DXY proposition.