March 23, 2022 13:04:34

Rising inflationary pressures are putting added demands on central banks to raise rates sooner and more than previously forecast. This points to an earlier-than-expected hawkish turn by the RBA as economic data also hots up.

Of course, commodity price strength is a key driver for the aussie. Iron ore prices among many others have risen sharply. The recent announcements by the Chinese authorities to help support the economy is also helping boost confidence in the region and further help pro-growth, commodity currencies like AUD.

It is always worth keeping an eye on the positioning of speculators and the big players in futures markets in currencies. Interestingly, aussie positions are the most bearish in the G-10, aside from the yen. That said, investors may be warming up to AUD after leading all major currencies for the month.

AUD/USD pushes to new year-to-date highs

Last time we wrote about the aussie, we highlighted that there could be strong upside ahead. This was because the pair had printed a double bottom reversal pattern. We suggested a measured move could take prices up towards 0.76.

Yesterday saw a strong break higher after a doji candle printed on Monday around 0.74. Prices moved above the previous year-to-date high at 0.7441 and this now becomes near-term support. This also tallies with a Fib level at 0.7431. Below here sits the 200-day SMA as a next support level at 0.7297.

Any more upside takes us to the March high from last year at 0.7531 ahead of the October high at 0.7555. Above here is congestion around 0.76 from a year ago.