By FX Empire.com
The AUD/USD pair rose again this week after first pulling back a bit. The pair currently finds itself at the 1.0750 level – an area that has been significant several times over. The level is a big barrier that will have to be overcome in order to continue the bullish move.
However, with the Federal Reserve promising low rates until at least the end of 2014, this isn’t the type of environment that we think the Aussie is going to struggle in. The pair certainly looks like it is ready for a pullback, but this should only attract more investors into the Aussie, and by extension out of the Dollar. The yield alone will get some investors as the bond markets are offering so little these days.
The 1.04 level below certainly looks supportive, and it was the site of our triangle breakout that caused us at FXEmpire to call for a 1.12 rate in this pair eventually. The move won’t necessarily be immediate, but to think that the rate would be 1.12 sometime between now and the end of 2014 isn’t exactly hard to believe either!
The pair will be bought as long as we can stay above the 1.04 level, and we expect to see most of the “handles” below here offering support in the meantime. The gold market did selloff on Friday, but the historical correlation of gold and the Aussie rising at the same time didn’t come into play. This is because the “safety” part of the gold trade sold off, not the “anti-fiat currency” part of it. As long as the central banks are easing around the world, the gold markets will in general be strong.
The Aussie is in fact strong against many other currencies than just the Dollar. This is truly a pro-Aussie market rather than an anti-Dollar one. Because of this, we like owning the Aussie for the long run, and will continue to buy it against the Dollar, as well as many other currencies around the world as cheap money becomes the norm everywhere.
AUD/USD Forecast for the Week of February 6, 2012, Technical Analysis
Originally posted here
