Australian Dollar Ready to Rally?

Australian Dollar Ready to Rally?

For a good part of this year, the US Dollar has dominated bullish activity in the forex markets.  Key counterparts like the Euro and Yen are still caught up in declines that have been marked by significantly bearish fundamental trends.  These trends have carried over into the Australian Dollar as well.  This is not surprising given the fact that the AUD is widely considered to be a commodity currency.  Of course, the AUD deserves this designation because the Australian economic supplies much of emerging Asia with many raw building materials (such as copper).  So if we are starting to see weakness in emerging Asia, these trends will also flow into the Australian economy as well.

In recent months, assets like the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP) have performed well given the macroeconomic climate that has been in place.  But when we look at recent activity, there is growing evidence that the AUD will finally start to rally as the currency has started to stabilize at the lower end of its trading range.  For those looking to make active investments in these areas, it is a good idea to consider using Juno Markets, which is widely recognized as the best forex broker in Asia.  The company has excellent informational resources that can be used to place trades that are focused on the region.  Here, we will look at some of the price levels that can be used to express those trades using the AUD/USD.

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AUD/USD – Australian Dollar vs. US Dollar

Critical Resistance:   0.7810

Critical Support:   0.7600

Trading Stance:  Potential For Rallies

AUD/USD Forex Strategy:  Prices are basing out near support at 0.7600.  The forex pair should be viewed as a buy as long as this support level holds.

The medium term downtrend in the AUD/USD has started to base itself near support at the 0.7600 level.  This is highly encouraging for the forex pair and it ultimately suggests that we might be on the verge of a rally in the AUD.  Indicator readings match this bias, so there is good reason to believe that we will start to see building momentum in the currency.  For most of this year, momentum in the US Dollar has dictated market prices against most of its commonly traded counterparts so we could start to see some major trend changes unfold over the next few months.  This is important for Australian investors because it will start to make foreign imports much cheaper for Australian consumers.