The Australian dollar initially shot much higher during the day on Tuesday, but turned around at the 0.8050 region to fall below the 0.80 level again. This is an area that is important on charts going back decades, so it makes sense that we would see quite a bit of volatility in the immediate vicinity. Because of this, it’s probably difficult to trade this market with any conviction. I do recognize that the 0.7950 level below should be supportive, so a small timeframe trader might be interested in buying in this general vicinity. However, for myself I believe that it’s important to pay attention to the gold markets, as it could give a bit of a clue as to where we are going in the AUD/USD pair.
US dollar weakness
I believe that the US dollar falling weaker should continue to help the Australian dollar, but quite frankly we did not get very hawkish words coming out of the RBA last night, and that means that the Australian dollar is probably not going to get help from potential interest rate hikes coming out of Australia. The Asian markets are doing well though, especially considering the commodity markets are continuing to go higher. Copper and gold are both rising, so I feel it’s only a matter of time before the Australian dollar continues to rally from that. In the short term though, looks as if we are not quite ready to take off.
Written by FX Empire