AUD/USD Forecast: Aussie Finally Makes a Move Higher

Christopher Lewis

At this point, as long as we can stay above the 200 day EMA, I believe that this market will continue to find plenty of buyers.

The Australian dollar initially pulled back a bit during the trading session on Thursday but turned around to show signs of life again. It looks as if the 0.75 level is going to continue to offer a bit of support, and if we can break out above the 0.76 level, this market might be extraordinarily bullish. I would anticipate a lot of noise in the meantime, but it is obvious that the US dollar is on the ropes and at the same time we are starting to see higher interest rates in the Australian bond market.

Speaking of which, the Reserve Bank of Australia decided not to buy any of the two-year notes during the option last night, and that has sent short-term Australian rates spiking. This of course makes the Australian dollar a bit more attractive, so I do think that it is only a matter of time before the Aussie rallies. Furthermore, the US dollar has been struggling at the same time, so that makes quite a bit of sense as well. With this being the case, I anticipate that we will see plenty of buyers on dips, as the markets will continue to see value hunters out there.

The 200 day EMA currently sits at the 7429 area and is starting to rise. In fact, we are getting relatively close to forming the so-called “golden cross”, when the 50 day EMA breaks above the 200 day EMA. With that in mind, I believe that it is only a matter of time before market participants continue to push this pair even higher. Based upon the “W pattern” that is clearly defined at the bottom of this move, it is likely that we could go looking towards the 0.78 handle.

Expect a lot of choppy volatility, but at the end of the day this is a market that simply does not have much in the way of resistance above, just the occasional problem. I think given enough time we will more than likely see this pair continue to bank on US dollar weakness, and of course the strength of commodities which has a major influence on the Australian economy itself. At this point, as long as we can stay above the 200 day EMA, I believe that this market will continue to find plenty of buyers.

AUD/USD

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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