The AUD/USD pair initially fell during the session on Thursday, but found enough support at the 0.90 level again to bounce. We believe that this level should hold, at least until the nonfarm payroll numbers come out. If we get a stronger than anticipated jobs number, you could see this market break down below the 0.90 handle, and start selling off drastically. This won’t be anything to do with the Australian dollar itself, rather that the Federal Reserve could possibly end up tapering off of quantitative easing much quicker than anticipated, and that of course will have my flying towards the US dollar.
Watch the bond yields out of the United States, and if they start to rise during the session on Friday, you could have a serious flight from the Australian dollar as the US dollar strengthens overall. Needless to say, if we get the exact opposite type of announcement, one where the jobs number is fairly weak, we could see this market shoot straight up. However, we still believe that there is a significant amount resistance above at the 0.9250 handle, so do not believe that the market could go any higher than that over the next several sessions.
The look of the candle really doesn’t tell us much, rather signifies that the market is simply going to buy it it’s time until we get the announcement. It’s at a significant support area, so this could be a serious decision for the Australian dollar. If we break down from here, we could go to the 0.88 handle without too many issues as there seems to be a little bit of an “air pocket” between here and there. If that happens, we think that piling on positions to the downside will probably be what most of the market participants do. We of course would follow suit, trying to make as much out of the move is possible. Below the 0.88 level, we feel this market goes down to the 0.85 handle without too many issues. As far as buying is concerned, it would be considered a short-term trade at best.
Written by FX Empire