Potential signal:
- I am buying the pair above the 0.7040 level, with a stop at 0.6985 below.
- I would look for a move to the 0.7160 level.
- The Australian dollar continues to see a bit of chop, but we are about to get a couple of pieces of information that could help move things.
AUD/USD
The Aussie dollar has rallied slightly during Tuesday's trading session, but I think this area right around the 0.7050 level, as well as the 50-day EMA, might continue to be a bit difficult.
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All things being equal, though, we get a couple of red-letter events in the next 24 hours that could move things. The first would be Australian CPI, and I suspect that unless that is a blockbuster, it is probably the less important of the two events. The other is the Federal Reserve interest rate decision and statement, as well as the press conference.
A lot of this could come down to what the Federal Reserve says
All things being equal, if we do pull back from here, I think the downside is probably somewhat limited. The Aussie has been relatively buoyant despite a horrible jobs number recently.
If the market were to break above the 0.7050 level, then I think it opens up another 60 to 75 pips in the Australian dollar. Pullbacks at this point in time should see support somewhere closer to the 200-day EMA, perhaps even the 0.69 level. From there to the 0.6850 level, I think you have a massive amount of potential support. Breaking that would be a whole different story.
When you look at the chart over the last maybe 9 months or so, we have been bouncing around. I think we are going to continue to do that here. When we get to an extreme, I look to go in the other direction. Eventually, the range breaks, obviously, but the next day or so might give us an opportunity to buy the dip or buy into a momentum push higher for a short-term trade. I am not looking for anything major here.
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