NEW YORK (Forex News Now) – The Australian Dollar is continuing to pressure to the upside against the US Dollar in global forex trading this week, after reaching “parity” last Friday during Federal Reserve Chairman Ben Bernanke’s speech in Boston.
While the AUD/USD formed two bearish shooting stars in a row at the end of last week, it should be noted that the bar for Monday is a conflicting hammer. (As highlighted by the blue arrow.) Because of this, the charts look like some form of consolidation is coming. This would coincide with the weekly bar, which was in fact a perfect doji.
With the recent one-way global forex trading trading of the AUD/USD, it is long overdue for a rest, and this week could be the time for it. With market confusion about the Fed’s “QE2”, and how much and long it will run, the US Dollar is weak, but there is going to be some debate as to how weak it should get.
Because of the nature of the psychologically important “parity” level, expect this pair to struggle at these lofty levels. Any longs should be based on a sustained break above “1”, perhaps a daily close above it. A conservative trader will want to see a breakout and then perhaps a test of “1” as support.
For any move on the downside to be confirmed, the first obstacle is going to be the daily trend line that has held since the latter half of August. A break below that, and the bottom of the hammer highlighted by the blue arrow would signal a correction in this pair has started.
With the Aussie’s strong correlation to the gold markets, any trader looking to buy the Aussie this week should keep at least “One ear to the ground” as to what that market is doing. With the gold run lately focusing on the lack of faith in fiat currencies that are being printed en masse, more than likely this potential bullish move cannot happen without the same in gold.