The Australian dollar fell slightly during the day on Monday, reaching towards the 0.76 level, and finding buyers underneath. I think that the slight bounce that showed signs of weakness shows that the market is probably going to reach down to the 0.7575 handle after that. If we did rally from here, a move above the 0.7630 level should send this market higher. I think that the goal market of course has a massive amount of influence on the Australian dollar, and that is something that you should be attention to as well. Gold is rolling over right now, so that should continue to hurt the Aussie dollar.
The Australian GDP was higher than anticipated recently, and that was the beginning of the impulsive move higher several sessions ago, and I think that the market is now starting to pay attention to other markets such as copper, and perhaps even the interest rate differential. If the GDP is any indication, the Australian central bank might be closer to raising interest rates than we thought. That being the case, the Australian dollar should continue to benefit. Nonetheless, expect choppiness and in the short term I think that we are selling off, and looking for support below.
The volatility in this market should continue to be a mainstay, so keep in a small position size might be the wise thing that do. If we do break down to the upside, I believe that the market is going to go to the 0.7750 level, and then eventually the 0.80 level after that. Ultimately, I’m willing to add on a break above the 0.7650 level, and perhaps go looking for a larger than usual position above there.
Written by FX Empire