Europe's debt crisis saw the Aussie dollar plunge to a low of 82 cents against the US dollar during late April as global investors flooded back into safe-haven currencies like the US dollar (USD) and the Japanese Yen. Since then the Aussie has regained some respectability on the back of Australia's renewed commodity growth story.

According to Kathy Lien, director of currency research at Global Forex Trading (GFT), the Aussie dollar should again nudge $US0.90 over the next eight weeks and move within a 5c band over three to six months. Lien estimates it will finish the year at $US0.88.

She thinks that the next two rate hikes - bringing the cash rate to 5 per cent - are already factored into current currency levels. And unless the RBA decides to move even more aggressively than anticipated, the Aussie dollar is unlikely to head beyond $US.90.

Lien has a two month EUR/AUD target of 1.37 and 1.35 by year’s end (currently 1.42).

Lien says China's plans for a controlled float of the Yuan against the US dollar signals their plans to buy more raw materials. On the strength of this likelihood the Australian Bureau of Agricultural and Resource Economics (ABARE) has revised its export forecasts upward.

She says one of the best ways to back a bullish outlook on the Aussie dollar is to use technicals to pinpoint entry and exit levels - matching the strongest with the weakest makes for the best of pairs when trading currency.

So with the AUD likely to be one of the outperforming currencies this year, she says the best trades are to be found scaling into long positions on both AUD/USD and AUD/Euro pairs - as dips appear in the rising trend.

According to Lien, the trade signals tool recently launched by GFT - Autochartist Trade Ideas - can help short-term currency traders reduce the amount of guesswork when deciding which currencies to trade. She says Autochartist uses pattern-recognition software to identify patterns forming, within which currencies and over what timeframes. “Beeps and pop-up charts mean that if you’re preoccupied with other trades, you’ll only be alerted when it detects a trade setup and the timeframe in which that trade may unfold,” says Lien.

She says add-on features within GFT’s trading platform offers traders real-time information based on over 15 common charts patterns, including exact entry, stop and limit points, probability of the trade reaching its forecasted level, suggested currency pairs to trade, whether to buy or sell and the time period of the trade.

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