(MENAFN- Daily Forex) The aud/usd bounced back and forth during the trading session, breaking through the 0.71 level. However, we have given back some of the gains, so it does look like we are struggling a bit to continue going higher. Keep in mind that the market is a little stretched, so a bit of a pullback probably is not a major surprise if it happens. Nonetheless, the Australian dollar looks like it's going to do everything it can to break out, so given enough time I do think that we go looking to the 0.72 level. Advertisement got a position to try? don't wait! trade aud/usd now
That being said, you can see that it is a big fight that we have on our hands, so we will have to watch to see what happens next. A pullback to the 0.70 level is reasonable to expect, so we could look at it through that prism as well. All things being equal, I would anticipate that there should be a little bit of market memory in that area. However, I suspect that before it's all said and done most of the decisions will be made next Wednesday as to where we go next.Looking for Value on Pullbacks
Next Wednesday we have the interest rate announcement coming out of the United States and of course the press conference from Jerome Powell. This will have everybody watching to see what the federal reserve is going to do, and I suspect that he may do everything he can to break the back of risk takers, meaning that we may see the US dollar pick up a little bit of strength. After all, inflation is still far too hot in the United States, so it does make a certain amount of sense that we would see the Federal Reserve continue to focus on that.
That being said, it's also worth noting that the Reserve Bank of Australia also has to deal with extraordinarily hot inflation, so both of these currencies could see a lot of external pressures in both directions. Ultimately, look for value on pullbacks in the short term, but Jerome Powell could change everything if you can get his message across finally. If he does, then we could see a turnaround but right now I suspect that we've got a situation where the market is trying to front-run what it believes, not necessarily what may be the truth before it's all said and done.
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