The Australian dollar broke out to the upside during the trading session on Wednesday, slicing towards the 0.81 level above, and that is a significant move as it offers the gateway to much higher pricing. In fact, it becomes more of a “buy-and-hold” scenario, and I think that it will offer plenty of opportunities on dips. However, in the meantime you are probably better served to simply wait for clarification and of course momentum to work in your favor. There’s no need to jump into this market now with both feet, because if we do breakout to the upside, we could be looking at the 0.90 level as a target, possibly even parity if you are willing to hang on long enough.
Never forget the correlation between gold markets and the Australian dollar, so if we can rally in the gold markets, that will only add more bullish pressure to this pair. The US dollar is on the back foot right now, and I think that continues to work against the value of it against most currencies, the Australian dollar of course is in any different. I think that the pair could be explosive, but obviously will have some negative moves. Once we get above the 0.81 level, this could become one of my favorite trades. I expect to see that this year but clearly, we have some work to do. As far as selling is concerned, I have no interest in doing so anytime soon.
Written by FX Empire