The Federal Reserve has recently suggested that they were going to cut interest rates, and at this point, it isn’t necessarily a question of whether or not they will during the month of July, but by how much and will there be more? With that in mind, it makes sense that the US dollar is starting to get hit against several other currencies around the world. The Australian dollar, of course, is no different and it could be for a host of reasons.
Gold has recently seen a lot of bullish pressure, and that helps the Australian dollar as Australia is the world’s largest exporter of the yellow metal. Beyond that, the RBA has paused a bit in its monetary easing, and the Chinese economic numbers, although slow historically, aren’t as bad as many feared.
With that being the case I look at the 0.7050 level as a crucial gateway to higher pricing. If we can break above there, that would complete a bit of a bottoming pattern that could send this market looking towards the 0.72 level, possibly the 0.7250 level after that. We have already crossed the 50-day EMA a couple of times now, and it is starting to turn higher. We do have the 200 day EMA above but at this point, it’s probably all academic.
As long as we don’t make a “lower low”, this is a market that looks to me as one that’s ready to turn around, and now we have several reasons to think that the greenback may slump against many other currencies, the Aussie included. With that in mind, I look for the bullish break out to take advantage of. Between now and then it’s simply a waiting game which is typically what Summer tends to be anyway. Dips could also provide bits and pieces of value to build a position from.