- The Aussie dollar has been somewhat noisy during the trading session on Friday as we continue to attempt a breakout.
- We have broken above the crucial 0.6850 level, so I think we are going to continue to see quite a bit of buying pressure.
- Short-term pullbacks continue to see a lot of support, especially near the 0.68 level.
The 0.68 level is an area that a lot of people will be paying close attention to. But I think ultimately, even though the market has been somewhat overbought at this point, I do think there's a situation where you have a lot of interest in not necessarily owning the Aussie itself, but perhaps getting rid of the US dollar.
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Federal Reserve Continues to Drive the US Dollar
The Federal Reserve, of course, has cut interest rates 50 basis points recently and that is now a main driver of US dollar weakness. That being said we are a little overdone at this point so don't be surprised to see a short-term pullback. That short-term pullback should be thought of as a potential buying opportunity.
If we were to break down, then the 50-day EMA at the 0.6740 level I think is the next support level. All things being equal, this is a market that I think continues to be noisy, but I do think continues to run away from the greenback and into higher yielding, or at least potentially higher yielding, currencies down the road. I think at this point in time it’ll be interesting to see how the US dollar behaves, and the Australian dollar could be thought of as a proxy for what other major currencies are going to do against it. I don’t have any interest in shorting this market, at least not in the meantime, and I think any pullback will more likely than not bring in a lot of value hunting by traders looking to take advantage of value.
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