If you’ve been reading my work here at FX Empire, you know that I think the area around the 0.80 level is positively crucial for the longer-term attitude of this market. It goes back to the late 1980s, and therefore there is a lot of “market memory” in this vicinity. When I look at the charts, I also recognize that recently we had tried to break out to the upside but found too much in the way of resistance at the 0.81 handle. I believe the pullbacks at this point are simply the market trying to build up enough momentum to make the break out. Once we get above that level, I think we could go as high as parity over the next couple of years.
Gold markets of course have their typical influence on this pair, and they look healthy as well. There seems to be a general running away from the US dollar, and I think that is one of the biggest drivers of this pair, and that will only accelerate if we start to see good numbers coming out of Asia, as Australia is a major provider of hard commodities for that region of the world. I don’t have any interest in shorting this market, at least not anytime soon. Longer-term, I believe that we will look for the 0.85 handle, the 0.90 level, and then eventually the parity level. I would add on short-term dips; the Australian dollar could be a career maker for some people.