The AUD/USD pair initially fell during the session on Tuesday, but found enough support near the 0.9350 level to turn things back around and form a bit of a hammer. The hammer of course suggests that there is buying pressure just below, and this makes sense as we have seen a bit of a “basing” in this general vicinity. With that, I believe that this market is trying to build up enough pressure to break out above the 0.95 level finally, which I actually see as resistance extending all the way down to the 0.9450 level.

Moves like this take a bit of momentum, so the fact that we are taking our time doesn’t surprise me. On top of that, we are in the summer months now, which of course tends to be a little slower than usual. All that being considered, I think this market is doing exactly what you would expect at this point in time.

The gold correlation could work against this pair though.

Gold markets got hit fairly hard over the last couple of sessions, and that of course is doing the Australian dollar no real favors as there is a longer-term correlation between the AUD/USD pair and the gold futures markets. If the gold markets drop down below the $1280 level, things could get really ugly for the Australian dollar, but at this point in time I believe that both of these assets will have a bit of a bounce in the near term.

If we can get above the 0.95 level, I think that this market has a bright future ahead of it. We could grind our way to the parity level, as it is the next major resistance barrier on the longer-term charts, and a level that the Australian dollar was quite comfortable with for some time. After all, it wouldn’t exactly be a real stretch to imagine that the pair could bounce around parity for some time as well. I have no real interest in selling this pair, at least not until we get below the 0.92 level, something that I do not expect to see anytime soon.


Related Articles
  1. Investing News

    This Is Why Every Chipotle Is Closed for One Day

    Chipotle Mexican Grill Inc. (CMG) has had a rough year when it comes to food safety. Management is hoping that closing all locations for a company-wide meeting Monday will help resolve the issues ...
  2. Credit & Loans

    What is an Alt-A Mortgage?

    Called "liar loans" for their low documentation requirements, Alt-A mortgages were hot until the subprime crisis. Now Wall Street wants to bring them back.
  3. Credit & Loans

    A FICO-free Loan? See SoFi's Super Bowl Ad

    Non-bank lender SoFi will air its first TV ad during Super Bowl 50. Here's how it's challenging big banks by providing an alternative approach to loans.
  4. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  5. Personal Finance

    What it Takes to Get a Green Card

    Grounds for getting a green card include having family members in the U.S., being a certain type of refugee or specialized worker, or winning a lottery.
  6. Fundamental Analysis

    The 3 Best Investments When Bull Markets Slow Down

    Find out why no bull market lasts forever, and why investors should shift their assets away from growth and toward dividends when stocks slow down.
  7. Investing

    Retirees: 7 Lessons from 2008 for the Next Crisis

    When the last big market crisis hit, many retirees ran to the sidelines. Next time, there are better ways to manage your portfolio.
  8. Fundamental Analysis

    3 Long-Term Investing Strategies With Strong Track Records

    Learn why discipline and a statistically valid investment strategy can help an investor limit losses and beat the market over the long term.
  9. Products and Investments

    There's a Reason They're Called Junk Bonds

    The closing of Third Avenue Managemet's Focused Credit Fund is a warning to investors and advisors. Beware the junk.
  10. Mutual Funds & ETFs

    Top 3 PIMCO Funds for Retirement Diversification in 2016

    Explore analyses of the top three PIMCO funds for 2016 and learn how these funds can be used to create a diversified retirement portfolio.
  1. What is arbitrage?

    Arbitrage is basically buying in one market and simultaneously selling in another, profiting from a temporary difference. ... Read Full Answer >>
  2. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  3. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
  4. What is finance?

    "Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process ... Read Full Answer >>
  5. What items are considered liquid assets?

    A liquid asset is cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted ... Read Full Answer >>
  6. What is comparative advantage?

    Comparative advantage is an economic law that demonstrates the ways in which protectionism (mercantilism, at the time it ... Read Full Answer >>
Trading Center