The AUD/USD pair initially fell during the session on Tuesday, reaching towards the 0.7750 handle. However, the Reserve Bank of Australia surprised the market a bit by suggesting that rates cuts start to be over after the one that we saw on Tuesday. With that being the case, the Australian dollar is probably oversold at this point and there are a lot of moving parts as far as I can tell.
Gold markets are not helping the Australian dollar. True, they did rise during the session on Tuesday, but they are essentially stuck in consolidation. Ultimately, I think that the 0.80 level is the beginning of a very significant resistance in the Australian dollar, so in order to break out above there I think we are going to have to pullback several times. We need to recognize supportive candles on short-term pullbacks in order to buy this pair, but we also need to recognize resistive candles near places such as the 0.80 level, so we can sell.
Commodity markets
Commodity markets in general are fairly soft these days, with the one major exception being the oil markets. This doesn’t necessarily have anything to do with the Australian dollar though, so with that being said and the fact that copper sold off rather drastically during the session on Tuesday, I think that the Australian dollar rally will be somewhat limited. With this being the case, I am taking the path of least resistance and simply looking at this as a market that will likely consolidate in a fairly tight range.
You will have to be nimble, selling at the top of the range which I see as 0.81, and the bottom of the range been a place where you would start to buying, somewhere near the 0.7750 level. With that being said, expect a lot of noise in a lot of volatility. If you have the ability to play the Australian dollar in the options market, that might be a safer route.
