The Australian dollar gap lower at the open on Monday, signaling that traders were starting to become a bit more excited about tax reform in the United States, but since then we have bounced to fill the gap, and now we are simply awaiting the RBA statement. I think that given enough time, the market will need to decide what it wants to do, and with the various influences on this pair, I think there will be very little in the way of clarity over the next 24 hours. When you look at this chart, we have to wonder about tax reform, the RBA statement, and of course gold markets all with the same time. That type of noise can be very choppy, and of course make trading very difficult to do.
The 0.7650 level above has been resistive in the past, and unless the RBA is overly hawkish or does the unthinkable, raising interest rates, I don’t think that we will break above that level. The one caveat could be the US Congress blowing up tax reform, which we can never rule out as they are very unpredictable these days. Ultimately, I think that you are probably better off sitting on the sidelines for the next 24 hours, at least until we get some type of clarity. Gold markets really aren’t helping the Aussie there, so I suspect that this will be a coordinated effort that is based around the US dollar, and not so much the Aussie.
Written by FX Empire