AUD/USD Price Forecast – Australian Dollar Continues to Grind Higher

The Australian dollar has gone back and forth during the trading session on Monday, kicking off the new year with a slightly positive tone. That being said, the Aussie could not hang on to some of the gains so I think at this point we may be getting just a little bit overextended in this pair. If that is the case, then a pullback makes quite a bit of sense and quite frankly I would be interested in taking advantage of it. After all, the Australian dollar has been overextended for a while, so a little bit of a “reality check” could help the situation in general.

AUD/USD Video 05.01.2021

The 50 day EMA sits above the 0.74 level and looks to be heading towards the 0.75 level, and I think that somewhere in that general vicinity we will see buyer step back into pick up the Aussie due to the fact that it will be cheaper. The 0.7750 level above has been a target of mine for some time, but I think we will eventually go looking towards the 0.80 level. This is about stimulus in the United States more than anything else, so I think that will continue to send the value of the dollar down.

Beyond that, there is the “reflation trade” and the “recovery trade” which favors commodities in general, and that of course has a direct correlation as to how the Australian dollar performs. That being said, markets cannot go in a straight line to the upside, but clearly, we have a trend to the upside that should not be traded against.

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