The AUD/USD shot straight up on Monday after the Fed Chairman Ben Bernanke stated that the case for Quantitative Easing could be made. He didn’t specifically state it outright, but was blunt about keeping rates as low as possible for as long as possible. With this in mind, gold and risk assets took off.
The Aussie follows gold markets over time, and this correlation continued on Monday. The pair recently bounced off of the 1.04 support level and the 200 day EMA. This was a crucial hold by the bulls, and as a result we are strongly bullish of this pair now. We are buying this pair on pullbacks, and believe that the 1.08 level will be tested again, and perhaps even broken. Selling isn’t a thought until we break below the 1.04 level, and close south of there on the daily chart.
Written by FX Empire