- The Aussie dollar has rallied just a bit during the trading session on Monday, as we have seen a significant shot higher in what is probably going to be looked at as thin liquidity due to the fact that it was Memorial Day in the United States.
- We also had the UK banking holiday as well.
- Don’t read too much into it other than it is probably a continuation of the overall attitude of the market.
- We have spent most of our time between 0.6650 and 0.6450, and we are trying to break out of it, but there is a lot of noise between here and 0.67.
The market looks bullish, but perhaps somewhat limited.
While I think it does look slightly bullish, I think you have to look at this as a market that is trying to sort out whether or not it can break out. So, the real trade for me is going to be above 0.67 because I think that will show not only a pullback after a short term breakout, but eventual continuation.
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Keep in mind that the AUD/USD is highly levered to commodities. And of course, the US dollar is a risk off currency. So, in that environment, it very likely strengthens if we get some type of bad news out there. The Federal Reserve is likely to remain tight for some time, but at the same time commodity markets have been extraordinarily strong as the market participants continue to deal with inflation. So, this might be a little bit of an outlier when it comes to major currency pairs going forward. So, I'm a little bit more apt to buy the Australian dollar than to sell it, but I don't know that we get a huge move quite yet.
All things being equal, I think range bound short-term traders will probably continue to benefit from this market, as it hasn’t made huge moves as of late. Obviously, that could change rather rapidly, but as things stand right now, it looks very much like a choppy endeavor.
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