The Australian dollar did rally a bit early during the trading session on Tuesday as the 0.7150 level continues to offer a bit of a floor.
All things being equal, this is a market that continues to see a lot of choppiness, and I think the 50-day EMA sitting just below the 0.7150 level offers a little bit of a floor.
If we can break to the upside, the 0.7200 level being broken to the upside opens up the possibility of another 60 pips or so to the 0.7260 level. If we were to break down below the 50-day EMA, then I would just simply step to the side.
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I probably wouldn't short the AUD/USD pair because, quite frankly, there will be other currencies that will fall much faster against the US dollar than the Aussie dollar. Ultimately, this is a market that I do favor the upside because the Reserve Bank of Australia had recently hiked, at least in relation to other currencies, but I also recognize that traders will be looking at this through the prism of whether or not we can find value.
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So, what I mean by that is short-term pullbacks should be a nice buying opportunity. But I also recognize that you have to be somewhat realistic in your expectations. This is a pair that's very choppy.
Makes sense because there's a lot of supply chain concerns out there, but at the same time, commodities keep rallying. So, expect a lot of noise. I like buying short-term dips. I have no interest in shorting the Aussie dollar, and would continue to look for buying opportunities.
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