- The Australian dollar has seen some volatility on Thursday, as we continue to see choppiness near the 0.71 level.
- Ultimately this is a market that has been very choppy over the last several weeks, but it has more of a bullish tilt to it.
- The one thing that I've seen time and time again is that it appears buyers are willing to step in and pick up cheap Australian dollars whenever they get the opportunity to.
I have no interest whatsoever in trying to get too cute here. I think you've got a situation where traders are looking to just simply push this market to the upside over the longer term, but I also recognize that we have the overhang of a lot of questions when it comes to the Federal Reserve and what it is the Federal Reserve will be doing as far as monetary policy.
After all, US economic numbers have been better than anticipated and with that being the case, it keeps pushing back the outlook for interest rate cuts, at least as far as the bigger ones and the larger amount of them. So, while we do have a couple of potential interest rate cuts later this year, the US dollar has been fighting back.
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Divergent Central Bank Policies
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That being said, the Reserve Bank of Australia continues to look like a central bank that is willing to raise rates later this year and in fact recently did. So, it all ties together as divergent central bank policy. The question at this point is how quickly the US cut will.
If we can break to a fresh new high, I anticipate that the Australian dollar goes looking to the 0.73 level. I have no interest in shorting this market and see support at both 0.70 and the 50-day EMA right at the 0.69 level.
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