The Australian dollar has rallied significantly during the trading session on Friday to kick things off, but then gave back some of the gains to turn around only to bounce again. Ultimately, this is a pair that is being moved by central banks, most specifically the Federal Reserve which is doing everything it can to drive down the value of the US dollar. Quantitative easing and loose monetary policy will continue to work against the value of the greenback, and therefore I think that is part of what is driving this pair higher. Now it looks as if we need to build a little bit of a base in order to go higher.
AUD/USD Video 27.07.20
Looking at the chart, I believe that the longer-term move probably goes looking towards the 0.80 level. That is an area that will attract a lot of attention, and therefore I would anticipate a lot of resistance. Between here and there, we will have a significant amount of pullbacks, and those should be thought of as potential buying opportunities in an environment that will clearly continue to be a “buy on the dips” scenario. To the downside, even if we were to break down below the 0.70 level, then the 50 day EMA that is rapidly running towards the 0.69 level should start to come into the picture as support. With this, I do believe that we eventually go higher, even if we do pull back from here.
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