The Australian dollar has rallied a bit against the US dollar during the early hours on Tuesday. That being said, the market is still very much in an uptrend so this should not be a huge surprise, and with the Senate confirmation hearing of Janet Yellen coming, it is very likely that traders will be looking for any reason they can to extrapolate that she is going to be extraordinarily dovish, which is historically true anyway. With this being the case, traders are going to be looking at the possible reflation trade, meaning that they will be looking towards commodities and that is often seen as a reason to get long of the Aussie dollar itself.
AUD/USD Video 20.01.21
To the downside, the 0.75 level is an area that a lot of people will pay attention to due to the fact that it is a large, round, psychologically significant figure, and of course an area that features the 50 day EMA and previous support anyway. That being the case, we do pull back towards that area think that a lot of people will be looking to take advantage of “cheap Aussie dollars”, and thereby buy the dip.
I do not really have a scenario in which I am looking to sell the Australian dollar anytime soon, but it is worth noting that we are somewhat stretched at these levels, so a little bit of choppy and back and forth behavior would make quite a bit of sense. To the upside, I believe that eventually the Australian dollar will go looking towards the 0.0 level, an area that obviously is a large, round, psychologically significant figure as well.
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