The Australian dollar continues to see a lot of noise, as we continue to see the markets favor the Aussie, as traders are reacting to the hike from the RBA.
Australian Dollar / US Dollar
The Australian dollar continues to see a little bit of noise and upward momentum due to the fact that the Reserve Bank of Australia has raised rates yet again to bring it to 4.1%, but all things being equal, this is a situation where we are still very much in a trading range. Despite the fact that the Aussie is an outlier in so much as it's bullish against the US dollar, we also have to deal with the Federal Reserve and its interest rate statement coming out on Wednesday.
I think you are going to have to be a little bit cautious here and, of course, pay close attention to the 0.7150 level. If we can break out of there and break above there for a daily close, then I think it means something important. It's worth noting that every time we've pulled back, buyers come back to pick up this pair, and I do think you have a situation where the interest rate differential favoring the Australian dollar probably continues to be an important thing as well.
Support Levels and Buying Strategy
With this being the case, the 50-day EMA underneath should continue to offer support, and the 0.6950 level also offers a little bit of a floor. I expect a lot of choppiness and volatility, but in general, I think this is a situation where you buy short-term dips as they offer a little bit of value.
If we were to break down below the 0.69 level, then it would change things, but right now it looks very much like a sideways but slightly positive market. This remains “buy on the dip.”