Australian dollar rallies during Wednesday trading
The Australian dollar rallied rather significantly during the trading session on Wednesday, reaching towards the 0.7460 level, an area that was resistive on Tuesday as well. I think if we break above there, we will probably then go looking towards the 0.75 level, which of course has a lot of psychological importance based upon the longer-term charts, and the large, round, psychologically significant number. The market has a lot of noise just above there, so I think that the sellers will more than likely jump in somewhere near that area. I believe that the market bouncing from the 0.74 level is a huge surprise, because it was a somewhat US dollar negative day.
Having said that, if we break down below the 0.74 level, the market would probably go down to the 0.7250 level underneath. Rallies at this point are to be treated with suspicion, because we have seen so much in the way of negativity and we have broken down through a longer-term uptrend line over the last several days. The 0.70 level underneath would be the target, as it is a large, round, psychologically significant number and of course an area that has been important more than once, and I think it will attract a lot of attention. If the market were to turn around and break above the 0.7550 level, it would be a complete change of attitude, but I think that the summer is going to feature a strong US dollar, and that will of course show itself here in the AUD/USD pair.