The Australian dollar continues to threaten a major resistance barrier against the USD, as the Chinese manufacturing sector has woken up, and the US dollar itself sees a few issues.
The Australian dollar has rallied during the trading session on Tuesday as we have seen the US dollar take it on the chin due to the increased tensions between the United States and Europe over Greenland. The idea of tariffs flying around so far has been working against the US dollar, but really, at the end of the day, we’ve seen this movie before, and eventually that becomes a non-factor regardless of the outcome.
This pair is a little bit different, though, because we have the Reserve Bank of Australia likely to raise interest rates sometime in the relatively near future, while the Federal Reserve may cut once or twice this year. That would suggest that this pair should go higher on an interest rate differential basis alone.
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The Chinese manufacturing sector has picked up just a bit here recently, and that, of course, has a major influence as well. So with that being the case, I think the pair probably continues to find plenty of buying opportunities on dips.
Key Support Levels
But if we were to break down below the 0.66 level, then it opens up the possibility of a move down to the 0.6450 level. Ultimately, this is a market that I think continues to show plenty of interest.
And of course, there are other things driving the Australian dollar right now, such as hard commodities. After all, it is a major exporter of iron, aluminum, gold, and other metals that have seen a bit of a boost. Ultimately, I am bullish, although not wildly so, because I think there are still plenty of geopolitical risks out there.
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