The AUD/USD pair initially fell during the course of the session on Thursday, and then turn right back around to continue going higher. We had a very strong positive candle form during the course of the day on Wednesday, as the Federal Reserve has stepped away from interest-rate hikes, at least as far as the number of them in the year 2016 is concerned. Because of this, this market should continue to go much higher and we believe that we will reach towards the 0.80 level which is our longer-term target.
Keep in mind that gold markets of course have a massive influence on the Australian dollar, and the reality is that the gold markets look like they are ready to continue going higher. Because of this, and the fact that central banks around the world are looking very dovish at the moment, it makes sense that gold will continue to go higher as it is a way to store value when currencies don’t hold much.
The 0.74 level below is the bottom of the 0.75 support level. This is essentially an entire “zone”, and it should continue to offer quite a bit of support for the market. In fact, we feel that it is essentially the “floor” in this marketplace. At this point in time, the market should continue to go much higher over the longer term so we are optimistic, but we recognize that the road higher is probably going to be a difficult one, at the end of the day it’s hard to imagine that the markets are going to come down, but we believe that we are starting to at least get a little bit of directionality.
The markets will continue to hang upon the words of central banks, and of course the value of the US dollar which of course has a direct correlation in this marketplace as the Australian dollar is a proxy for gold as far as Forex traders are concerned. At this point in time, until we break down below the 0.74 level, it’s almost impossible to imagine shorting this market.