The Australian dollar had a strong session on Wednesday as Janet Yellen testified in front of Congress that the interest rate hikes coming out of the United States might be a little bit more measured and slower pace than originally thought. Because of this, I think that a lot of repricing is going on around the world, as interest rate differentials may be a bit slower to widen. Because of this, I believe that the Australian dollar may continue to go to the upside, perhaps reaching towards the 0.77 level. A break above there should send this market looking to the 0.7750 level, which is even more resistant. Once we can clear that, I feel that the Aussie will then go looking towards the 0.80 level.
The correlation of Gold
Gold markets continue to be very important when it comes to the Australian dollar, and with the comments coming out of Janet Yellen today, it’s possible that we may see a resurgence of that market. If we do, that should continue to send the Australian dollar to the upside, and towards that massive resistance barrier. I think that the to have to happen at the same time to the upside, or it makes no sense to be involved. Pay attention to gold, it is suddenly going to be very much in focus.
Written by FX Empire