The Australian dollar has rallied a bit during the trading session on Monday, as it looks like value hunters are starting to return. Beyond that, Gold markets look a little bit bullion, so that should continue to put upward pressure on the Aussie dollar itself. I believe that a lot of the extremely negative attitude has been taken out of the market, and that should help the Australian dollars well. The US dollar of course is the other side of the equation, and it has recently bounced from a major low in the US Dollar Index. However, I think that we do see longer-term US dollar negativity, so this bounce may have been a “dead cat bounce.”
At this point, it looks as if the 0.78 level is trying to act as support, and I think that if we can break above the 0.75 zero level, the market will probably grind towards the 0.79 level next. Move above there should then send the market looking towards the major level in the form of the 0.80 handle. That’s an area that goes back decades and its importance, and I cannot stress how much that level is as far as importance is concerned. If we can break above there, and clear this overall zone, that will give the Australian dollar a chance to become a “buy-and-hold” currency. Otherwise, I think that we are going to continue to be choppy, but I still prefer the upside longer term.
Written by FX Empire