The Australian dollar shot higher during the day on Friday, reaching towards the 0.7975 level. We have seen a significant amount of noise recently, and it now looks as if the gold markets may be trying to find some type of floor. If they do, I think that the Australian dollar will eventually break above the 0.80 level. Ultimately, I think that the pair will go much higher than that, but I recognize it will take a certain amount of work. If we can break above the 0.81 handle, the market will be free to go much higher. Ultimately, I think that the market should continue to move back and forth due to risk appetite in Asia, and of course the value of the US dollar on the whole. Given enough time, I think that we will continue to see buyers on these dips.
The value of 0.80
The 0.80 level has been important over the decades, and I believe that if we can clear that level, it’s likely that the market will continue to see people jump in as longer-term traders will be looking to reach towards the 0.90 level above, and then possibly even the parity level. It will be interesting to see how this plays out though, because the Federal Reserve of course is looking likely to clean up its balance sheet, which is good for the US dollar overall. The question now is whether there is a “risk on” trade coming. Ultimately, breakdown below the 0.79 level should send this market looking towards the 0.78 level underneath, because quite frankly that’s where we broke out from previously, and that is an area that by convention should offer support due to that previous barrier. This could be a very volatile market over the next several sessions.
Written by FX Empire