The AUD/USD pair rose during the session on Monday, but as you can see struggle that the 0.95 handle and got pushed down. However, this is a market that we are watching with great interest right now because it is so close to breaking out and going above a significant level. If we can get that close above 0.9550 that we’ve been looking for, we think that the Australian dollar goes the parity in relatively short order.
One of the main drivers of this will be what the Federal Reserve does, and we all know that it seems unlikely they will be able to taper off of quantitative easing. This will more than likely cause problems for the US dollar in general, and as gold will gain in that particular scenario, it’s not a surprise to see the Australian dollar do the same thing. On top of that, there will be plenty of commodities out there that rise which the Aussie typically will follow along. After all, all commodities are basically priced in US dollars, and as the Australians export so many commodities, it makes sense there is a bit of a longer-term correlation.
If we can get above the 0.9550 level, there is very little in order to stop this market from hitting parity. In fact, it would be a nice pullback from a significant drop in the value the Aussie dollar that we’ve seen over the last several seasons. Going forward, whether or not we can get above parity is probably a completely different question, but we think that it will certainly be tested and the fact that we have been so far above parity should relinquish the market of any weariness that it would have been in that general vicinity. Quite frankly, it will more than likely be significant resistance, but it won’t be the be-all end-all of resistance as the market has sliced through the parity level several times out. On the other hand, if this market falls, we believe that it will more than likely be nice buying opportunity as the bullishness is so prevalent.
Written by FX Empire