NEW YORK (Forex News Now) – There hasn’t been much in the way of positive global forex news for the beleaguered dollar, and that is set to continue with the Aussie making substantial gains on USD in trading today.
AUS/USD rose significantly and reached a new 2-year high at 0.9582 in the Asian trading session before settling down between 0.9560 and 9.570, still well above the previous session’s mark. This is good news for Aussie traders, who have witnessed a resurgence in the currency following positive statements from the Reserve Bank of Australia.
Currently in the North American session, AUS/USD is down slightly, dropping 0.1% to 0.9527. While a retreat is expected after a strong session earlier in the day overseas, the current mark leads some to question whether or not there is continued strength in AUS/USD, and whether or not there is an upward trend at all.
AUS/USD Upward Trend?
To answer the second question, we’ll turn to the charts. An examination of the past performance to date in 2010 suggests that the dollar has had more to do with the movement of AUS/USD (and EUR/USD and USD/JPY) than its counterparts. AUS/USD reached a low in June, trading at 0.809, right around the same time EUR/USD reached its yearly low. This was a time of strength in the dollar, but since then, the dollar has retreated significantly from its major pairs.
Therefore, we can conclude that there has been an upward trend in AUS/USD since mid-summer, sending the pair back up towards a new 52-week high of 0.9582.
Is there enough global forex news to suggest that there is underlying strength to the pair, though? In other words, can we expect the upward trend to continue?
The driving force behind AUS/USD has been the dollar, but the positive reaction to the announcement by the Reserve Bank of Australia suggests that the Aussie is beginning to contribute to the move.
The Reserve Bank of Australia Speaks
In its announcement, the Reserve Bank of Australia, in a nod to rising prices, suggested that rate increases may be in order in the short term due to a growing economy. You might remember that Australia was the first major economy to increase its interest rates following the global recession. If it does so again, interest in the Aussie will increase.
Global forex news is buzzing with the possibility of interest rate increases in the major currencies. Chances are, the Reserve Bank will raise rates in the Land Down Under, which will give underlying strength to the Aussie and further increase AUS/USD.
Look for support levels for the next week to be at 0.9276 and resistance to be at 0.9456.