Will the Aussie Pause on the Way Up?
Forex News Today: Daily Trading News

Will the Aussie Pause on the Way Up?

The Australian dollar celebrated on the greenback’s weakness and reached new two-year highs. It’s now facing important fundamental and technical tests.

AUD/USD is now trading at 0.9710, after already reaching 0.9730. These levels were reached after yet another break:

aud usd rising channelAussie rising in channel – click to enlarge.

After breaking last week’s high of 0.96, AUD/USD paused but then made another breakout, above 0.9670, which was a stubborn peak during May and June 2008.

The next peaks from 2008 provide the next resistance levels: 0.98, a round number and a peak in July 2008, and then the all time high of 0.9849. The levels that it recently crossed provide support.

This winning streak began at the beginning of August, when the dollar began falling. It then got a push when the Aussie jumped over the significant and veteran resistance line of 0.9327, enjoying good data from its main trade partner, China.

Reaching these highs without a real break means that many the pair could be in overbought conditions, triggering traders to take their profits and send the Aussie down, even if the next barrier isn’t so close, and despite the pair being in the middle of the channel.

The Aussie faces an important test soon – building approvals are release on Thursday at 1:30 GMT and are expected to remain unchanged. This figure always rocks the Aussie. If last month’s 2.3% rise repeats itself, the Aussie could extend its gains and test new levels.

Together with this release, we have Private Sector Credit (Exp. +0.3%) and the RBA Financial Stability Review which will shed some light on the banking system – probably doing better than in other countries.

Bigger releases are due next week – the rate decision and employment figures.

I continue being bullish on the Aussie in the long run, as the fundamentals are great. AUD/USD parity is in sight now. But, in the short term, profit taking will probably appear before further gains.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.