Aussie dollar rallies slightly to test resistance on Tuesday

The Australian dollar has struggled a bit during the day to continue the upward momentum we started out with, which is not much of a surprise considering that there was a major uptrend line there. The market breaking above that major uptrend line would of course be bullish, but I think it’s not until we clear the 0.77 level that the buyers could breathe a sigh of relief. I recognize there’s a lot of noise here, but ultimately this is a market that continues to struggle with higher interest rates in America, and of course lower gold prices. We have gotten a bit of a bullish sign in the fact that the US and China have stepped away from a potential trade war, but I think any rally in the Australian dollar due to that will be short-term at best.

Looking at this market, I think it’s very easy to imagine it dropping back down to the 0.75 handle, but if we were to break out to the upside, and I would remind you that it’s not until we break the 0.77 handle that I’m impressed, then we could go as high as the 0.80 handle, a very unlikely scenario. I think we will continue to see US dollar strength over the summer, and this pair of course will be any different than many of the other ones. With that in mind, I’m looking for signs of exhaustion to continue to sell this market, as it most certainly will struggle with the interest rate differential.

AUD/USD Video 23.05.18