AUD/USD Forecast 07/10: Aussie Remains A Buy On Dips (Video)

(MENAFN- Daily Forex) The Australian dollar continues to see a lot of noise, but with the Reserve Bank of Australia looking hawkish, this provides a bit of a floor in the range that we have been in for some time.

AUD/USD

The Australian dollar has rallied ever so slightly at the beginning of the trading session on Tuesday as we are now threatening the crucial 200-day EMA.

All things being equal, this is a market that I do think remains somewhat range-bound, and when you look at the stochastic oscillator, we crossed into oversold conditions a couple of days ago, and we're now starting to react. The question is whether or not the 200-day EMA offers a bit of a barrier.

Top Regulated Brokers1 Get Started 74% of retail CFD accounts lose money The interest rate differential does favor the US dollar

If we can break above the 200-day EMA, then we could go looking to the 0.7250 level. The interest rate differential does favor the U.S. dollar, but the Australian dollar has the added bonus of being attached to commodities, and that might be where its real power lies, quite frankly, with the gold market trying to stabilize, the copper market still being very strong, and, of course, the Reserve Bank of Australia being hawkish.

I do think that you have a situation where the Aussie may continue to recover as traders are starting to cut down the possibility that the Federal Reserve might be looking to hold still this month, as opposed to the rate hikes that everybody had anticipated.

EURUSD Chart by TradingView

Ultimately, I think this remains a buy on the dip. The 0.6850 level remains a floor. The 0.7250 level above offers resistance. This is a market that I think, given enough time, probably continues to go back and forth in this range where, at the bottom of it, it offers a little bit of a discount for the Aussie dollar.

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