The Australian dollar has initially dropped a bit during the trading session on Wednesday but has turned around to show signs of life again as we continue to see a lot of volatility in the bond market.
If interest rates in America can continue to drop like they have early during the session, then you have a scenario where the Aussie dollar might be able to flourish.
After all, the Aussie dollar has been one of the better performing currencies against the dollar in a relative speaking manner as the Reserve Bank of Australia has recently gone through rate hikes, which is something that most central banks around the world are not doing, they're basically sitting still.
Commodity Boom and Range Bound Market
Furthermore, there is the commodity boom at the moment that a lot of people will be watching closely, and as a result, a lot of Forex traders will use the Australian dollar as a proxy for something like gold.
Ultimately, I do think that we do go looking towards the 0.7250 level given enough time.
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I also think this is a market that's probably more range bound than not, and with that being the case, I believe you have to look at this as a buy on the dip market.
I don't have any interest in trying to short the Aussie. It's one of the few currencies that I don't really want to short against the US dollar.
And if that's going to remain the case, then I think if we get closer to the 50-day EMA, that might be the value trade you're looking for.
If we break down below the lows of the last couple of days, then okay, maybe some things will change. Maybe we will go looking towards the 0.6950 level. But right now, I'm not ready to be that concerned.
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