The Australian dollar gapped higher to kick off the week after the conservatives Power. At this point in time, it’s very likely that we could see a bit of a relief rally, perhaps driving towards the 0.70 level. The reason that I say this is that the United States and China continued to chirp at each other from across the Pacific Ocean, and the Aussie has held a relatively well. If that’s going to be the case, the market should very well find plenty of reason to rally. Quite frankly, if the US/China situation can’t kill off the Aussie, that’s a strong sign.
AUD/USD Video 21.05.19
Remember, we are in the middle of the major consolidation area that I have been talking about for weeks. It’s a 200 PIP range that extends all the way down to the 0.68 handle, so I would expect a lot of noise in this region. If we can break above the 0.70 level, then it becomes more of a longer-term move to the upside in my estimation. However, there is expectations that the RBA will cut interest rates sooner or later, so that of course weighs upon the Aussie as well.
All things being equal, we almost never trade the Aussie dollar based upon Australian internals, at least not longer-term. It seems to be more about China and I don’t think that’s going to change anytime soon. With that being the case, I suspect that the fact that we have levitated here is a good sign.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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