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Australian Dollar Bounces

The Australian dollar continues to buck the trend of US dollar strength, as the commodity correlation continues to push the Aussie higher. Furthermore, the Royal Bank of New Zealand recently raised interest rates, so there is a bit of a sympathy move here as well. Remember, both of those are commodity currencies so people will look towards the markets in a similar vein.

AUD/USD Video 10.03.22

We are bouncing around the 200 Day EMA, so this is a longer-term signal that could be starting to show itself. If we do break to the upside, we need to get above the top of the candlestick from Monday to truly test the longer-term target of 0.75. Anything above there could have this market going much higher.

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On the downside, if we break down below the lows of Tuesday, then it is likely that we go looking towards the 0.7150 level. That is an area where we have seen a little bit of support previously, so it does make a target for short sellers. Ultimately, I think we are going to see more choppiness than anything else, as there is so much in the way of uncertainty out there.

Looking at the chart, you can see just how volatile this has been, especially as it is moving against the US dollar longer term. With that being the case, the market is swimming upstream, but it certainly looks as if we are still going to go higher despite the fact that the world is so dangerous at this point. In this scenario, it looks like we are ready to pay more attention to commodities than anything else. Ultimately, this is a “buy on the dips” market although I do not like shorting the greenback.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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