AUD/USD Price Forecast – Australian Dollar Continues to Grind

The Australian dollar has done very little during the trading session on Monday, as we continue to grind back and forth to kick off the week. As you can see, the market has recently been very bullish until the last two weeks, where we started to grind sideways. This makes sense because we need to digest gains, and of course you can also make an argument that there are a lot of concerns out there as to whether or not we have gotten ahead of ourselves. Nonetheless, simple momentum should continue to push the Australian dollar higher over the longer term, and dips at this point in time will probably be thought of as buying opportunities. In fact, I would love to see an opportunity to get long of this market near the 0.75 handle, as denoted by the rectangle on the chart.

AUD/USD Video 26.01.21

To the upside, the 0.80 level I think it is the target, but it will take a bit of time to get there. We would need to see a sudden “risk on” type of momentum play to make that happen, so you would see the US dollar losing strength almost everywhere that point. The Australian dollar strengthens when the commodity markets strengthen, especially hard commodities such as copper, iron, and aluminum. This should continue to be the overall correlation, as it is a play that probably has legs for a while. After all, the pandemic has shut so many things down that people are banking on the “reflation trade” of a global scale. This means demand for things that Australia exports, especially to places like China. That being said, I have no interest in shorting this pair.

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