The AUD/USD pair rose during the course of the session on Wednesday, testing the 0.72 handle. We did break above there, but ultimately I still see a significant amount of resistance all the way to the 0.73 handle. This market is getting a little bit overextended at this point but I recognize that if we did break above the 0.73 level, we would have eventually seen quite a bit of selling pressure abated. With that being said, it’s very likely that this market will see a lot of volatility in the meantime, and I believe that the gold markets will of course assert its influence on the Australian dollar.
Ultimately, I believe that this area will find a lot of selling pressure in this general vicinity, so I’m waiting to see whether or not we can form some type of resistant candle. However, if we get above the aforementioned 0.73 level, I feel at that point in time the market will probably try to reach towards the 0.75 level.
Gold markets
Pay attention to the gold markets, as the correlation is fairly strong with the Australian dollar. If we can break above the $1160 level in the gold futures markets, I think that it’s only a matter time before the Aussie follows. It should be noted that the gold markets form the moment during the day though, so it will be interesting to see what happens next. It looks as if we are at a bit of a crossroads when it comes to precious metals, so I think ultimately we will get a trend change. I think we are starting to see the very beginning of it, so I’m not willing to take on that fight quite yet. However, I do recognize that the Australian dollar has been far oversold, and we are about due for a trend change as Forex markets tend to move in cycles of 2 to 3 years.
