Aussie dollar continues to fight against New Zealand dollar

The Australian dollar initially fell during trading on Monday but has turned around to show signs of strength yet again. By forming another hammer shaped candlestick, this shows just how resilient the uptrend in the Aussie is against the Kiwi dollar. Furthermore, the New Zealand dollar is falling against most other currencies, so this move makes quite a bit of sense.

Underneath, the 50 day EMA is coming into the picture and should continue to attract a lot of attention in and of itself. Ultimately, this is a market that will continue to grind towards the highs of the 1.0850 level, and then possibly further. In fact, it looks a lot like consolidation after a huge move higher. In other words, the market is simply “digesting the gains.” This is something that’s rather common, as people begin to try and discern whether or not the market is comfortable at these higher levels. At this point, one would have to think that it is in fact very comfortable, and if that’s going to be the case it’s likely that the market will continue much higher.

The next obvious target would be the 1.10 level, as it is a large, round, psychologically significant figure. The 50 day EMA is sloping upwards quite nicely and has acted as significant support. This should continue to be the case, and after the action on Monday it seems to have only reinforced that scenario. Ultimately, this is a market that I do believe goes much higher, but it does tend to be a bit choppy overall as the two currencies are so highly correlated. With that being the case, it does look as if the Australian dollar has the upper hand, perhaps due to its high correlation with gold as it has been rallying as of late.