The Australian dollar rallied on Monday as the markets continue to attempt to break higher.
- The Australian dollar rallied quite nicely during the early hours on Monday but continues to struggle above the 0.67 level.
- While we have not exactly rolled over completely, it is obvious there is a bit of hesitation in this neighborhood and that is something worth paying attention to.
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The overall attitude of the Australian dollar will be highly influenced by China and what's going on in their manufacturing sector, which right now is starting to perk up a bit. So that is a good thing for the Aussie dollar.
The Reserve Bank of Australia will continue to perhaps have to raise rates. They are most certainly closer to it than many other central banks around the world and therefore it does give a little bit of a boost to the Australian dollar.
0.67 Level Magnet
At this point in time, it looks like the 0.67 level will continue to be a bit of a magnet for price and if that's going to be the case, then you look at this as an opportunity to perhaps fade moves that get a little too far from there. If we were to break above the 0.6750 level on a daily close, then I think we probably go looking to 0.69, which is my longer-term target for bullish behavior.
To the downside, if we were to break down below the 50-day EMA, basically 0.6625, then I think you probably have a deeper correction, maybe even as low as 0.6450.
This is all about the Reserve Bank of Australia needing to raise rates possibly in the next couple of meetings, so the market is trying to get in front of that. Keep in mind there will be a meeting here in the next couple of weeks and people will be watching the press conference for clues.
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