The Aussie dollar has pulled back just a touch during the early hours of trading on Tuesday as the same ceiling continues to frustrate the bulls in this pair.
AUD/USD
The Aussie dollar has pulled back just a touch during the early hours of trading on Tuesday as the 0.71 level continues to be a bit difficult to overcome.
That being said, this is the one currency that I won't short against the US dollar, mainly due to the fact that the Reserve Bank of Australia is very likely to have to raise rates. In this type of environment, I think you have to look at any move above the 0.71 level as a potential buying opportunity, and I think that could send the Aussie dollar looking to the 0.73 level before it’s all said and done.
Potential for Higher Targets
However, I also recognize that this barrier has been very difficult to get rid of and we continue to see a lot of hesitation. With that being the case, I think you're looking for dips to buy into. However, if we were to break down below the 0.69 level, that would be extraordinarily bearish.
In that environment, I anticipate that the US dollar strengthens against almost everything else and although you could short the Australian dollar, you're probably going to have a better time buying the dollar against the yen or perhaps shorting the euro against the dollar, something to that effect.
This is an outlier of a currency pair and that makes this so interesting to watch. Another thing that you can take from this is perhaps if the Aussie rallies from here, but the dollar behaves well against the euro and the pound, maybe you're looking at shorting the euro against the Aussie or something to that effect. There's a lot going on in the world right now and the Australian dollar, I think, is one of the big winners.
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