The Australian dollar rallied again during the trading session as we are looking to finally break out above the crucial 0.7150 level. Ultimately, the central bank in Australia is a big factor.
AUD/USD
The Australian dollar rallied again during the trading session on Wednesday as it looks like we are going to try to reach the 0.7150 level. The 0.7150 level is a major barrier that I think a lot of people will be watching and quite frankly the Australian dollar has been very strong over the last several months, but ultimately, I think this is a short-term pullback as a potential buying opportunity.
The market is likely to continue to see a lot of upward momentum as the Reserve Bank of Australia is likely to raise rates going forward. If we can break above the 0.7150 level, then it opens up the possibility of a move to the 0.73 level.
Interest Rates and Market Sentiment
If we fall from here, then it opens up the possibility of a move down to the 0.70 level and then possibly the 0.6950 level. The US dollar has been fairly weak and that of course has shown itself in multiple currency pairs, but when you have a situation where the central bank is likely to raise rates, the currency tends to appreciate it right along with it.
I think that's what's happening here in the Australian dollar, and I have no interest in shorting this market. Even if the US dollar were to suddenly pick up strength, ultimately, I think you have a scenario where you don't short this pair. But if the US dollar really starts to fall apart, then the Aussie should be a big winner. Ultimately, I like going long of this market and I see the major resistance barrier just above as a potential opportunity if we can break.
Potential signal: I am buying the AUD/USD pair above 0.7150, with a stop loss at 0.6950 below. A target of 0.72 is likely.