The Australian dollar has been very noisy during trading on Tuesday, as CPI numbers coming out of the United States suggested that inflation was on track. This of course helps gold, but more importantly it helps the risk appetite of traders around the world. This has money flowing into commodity currencies such as the Australian dollar, and therefore we saw the usual reaction to the “risk on” appetite. The Australian dollar reached towards the 0.79 level, an area that is going to be somewhat resistive, but I do think that we eventually break above there.
We are starting to see a little bit of a push back on the short-term charts, but quite frankly I think there is plenty of bullish pressure to turn around and continue to rally, but a pullback may be necessary to build up enough momentum to finally break out above the 0.79 level. We have done this recently, so it would make sense to see it happen again. I don’t think that this is a massive barrier that will be difficult to overcome, but it’s not exactly easy either. There will be work to be done to break out.
Currently, looks as if the 0.7850 level underneath is the initial support, and then most certainly we have even more support down at the 0.78 handle below there. Once we break the 0.80 level above, we will make another attempt at the 0.81 level. I think that longer-term, the Australian dollar will continue to strengthen, but we have a lot of noise around the 0.80 handle to work through, which we are at the very bottom of that general zone.
Written by FX Empire