The Australian dollar rallied to kick off the week but continues to see a lot of resistance at the same level.
AUD/USD
The Australian dollar rallied early on Monday to show signs of strength as the 0.71 level continues to be a bit of a barrier and now that we are struggling to get above there it suggests to me that we have a scenario where we are trying to continue the upward pressure but the Australian dollar is somewhat limited in its ability to fight US dollar strength.
The Australian dollar of course is a currency that is heavily influenced by risk appetite so we need more positivity out there when it comes to risk appetite to get the Aussie going but it is a currency that's a bit of an outlier when it comes to trading against the greenback at the moment as the Reserve Bank of Australia is likely to raise interest rates later this year something that most central banks are not doing.
Aussie Resilience and Interest Rate Outlook
With that in mind I don't have any interest in shorting this pair although I watch it closely due to the fact that if the Aussie was to fall apart then it would show that the US dollar is strengthening quite a bit and you probably get more traction against other currencies such as the Canadian dollar or even the Euro maybe even the British pound after that.
With all of that I think there's plenty of support all the way down to the 0.69 level so as long as we can stay above there where the 50-day EMA is currently racing towards I think you've got a situation where you continue to buy dips and take advantage of value but be cognizant that this is also an indicator not just a currency pair as a US dollar strengthening here would probably have knock-on effects in multiple other currencies.