The AUD/USD pair fell hard for most of the session as the “risk off” trade was the main theme for the day. However, in the late hours the Americans decided to take the words of the French and Italians as a sign that Eurobonds are coming. This is a problem though, as the Germans are against it, as well as the Finns, Dutch, and Austrians. Guess who would have to back those large bonds? Yep, the ones who oppose it. It’s easy for those that need money to agree that they should have their neighbors cosign for the loan. This only drives home the point on how the European Union should have at least two currencies.
The announcement will come after this article is written, but the odds are that disappointment will follow. If we get a pop in this pair, it should be thought of as a possible pullback from which to sell from if you have missed the move. The parity and 1.02 levels look very resistive. On a lesser scale, the 0.99 does as well. We are willing to sell on weak action in those areas. Obviously, a fresh new low would have us selling as well.
Written by FX Empire