Australian Dollar Has a Strong Week

The Australian dollar has rallied rather significantly during the course of the week to finally break above the 0.73 level. This is an area that I think a lot of people will be paying close attention to as it is the most recent high before this one. Whether or not we can hang out above there is a completely different question, but if we can break above there then the market is likely to go looking towards the 0.75 handle.

AUD/USD Video 07.03.22

The size of the candlestick is rather impressive, so it does suggest that given enough time we are going to continue to see bullish pressure. However, with the geopolitical risks at the moment, not the least of which of course is the war in Ukraine, there may be a flight to quality and safety. Having said that, it is interesting to see that even though the bond market in the United States has started to strengthen again, the Aussie has somewhat ignored that.

I believe a lot of this comes down to the commodity markets, which are a way that people get involved to fight inflationary pressures. If that is going to continue to be the case, then the Australian dollar, and of course the New Zealand dollar, both will be beneficiaries of that type of trading. One thing I think you can probably count on more than anything else is going to be volatility, as we have so much in the way of uncertainty out there. With interesting is that we have recently formed a double bottom at the 0.70 level underneath. That of course is a large round number that has meant quite a bit over the longer term.

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