The AUD/USD pair fell rather significantly the session before, but we did have a nice bounce and rise during the session on Wednesday. This was partly in reaction to be stronger than anticipated CPI numbers out of Australia, slamming this pair into the 0.9450 level. The biggest problem of course is that there is a significant amount of support all the way to the 0.95 handle, so therefore it is very difficult to start buying this pair until we break above that level.
If we can get above that area though, that would be very bullish sign and send the Australian dollar on its next leg higher. At that point in time, we would anticipate this market to head to the parity level, and then possibly higher than that. Although, you should keep in mind that it is in fact summertime so the move will probably be somewhat muted.
Pullbacks will more than likely happen, and in our opinion we believe that they will be needed to build up the momentum necessarily to break out above the 0.95 handle. In fact, that area was so resistive that we would not be surprised to see several pullbacks in a row. If we get this, we are willing to buy each one, but we recognize that they could all end up being short-term buying opportunities, and nothing more.
As far as we can see, there really is no interest on our part of selling, but we do break down below the 0.93 handle, we do recognize of the 0.92 level more than likely be targeted. That is a massive supportive area, and a break below that of course would completely wipeout the uptrend as far as we can see. Nonetheless, we still believe that we go higher, and that’s especially true after the very impulsive candle for the Wednesday session, is that the buyers are starting to step up their pressure. However, be careful between now and the breakout as it will more than likely be very volatile, and wipeout a lot of accounts.
