The Australian dollar fell a bit during the day on Tuesday, but found enough support near the 0.74 level to turn things around and shoot much higher. Breaking above the 0.7450 level is very significant, and if we can continue the bullish pressure, I think that the market then will go to the 0.75 level above, which was significant resistance in the past. I think that it’s only a matter of time before rally and of course if gold can pick up due to a “risk on” rally, the market should then continue to go much higher as well. The gold markets could be used for a safety play as well, so if gold is being bought as a fear trade, then the Australian dollar won’t follow. However, if we feel much better overall in the markets, then this pair will go higher as well.
The Australian dollar looks as if it is starting to strengthen, but quite frankly it’s cousin, the Kiwi dollar looks likely to be stronger going forward as we have seen so much in the way of bullish pressure. I think that the market should continue to favor the Kiwi dollar, but I think that they both will probably try to move in the same direction. If we were to break down below the 0.74 level though, I would be a very negative sign and send the Australian dollar much lower. Either way, I expect quite a bit of volatility in this pair, but that’s not necessarily going to be unique in the AUD/USD pair, as currency markets in general look as if they are running around in circles. Expect quite a bit of volatility going forward, so therefore pay attention to your stop losses going forward.
Written by FX Empire