The AUD/USD pair rose during the session on Monday, breaking through the 0.95 handle finally. In fact, this market now looks like it's poised to breakout to the upside, and finally get above the 0.9550 level that I have been looking for in order to start buying. Ultimately, I believe that the US dollar will be on its back foot going forward, and because of that I think that the pair should be stronger over time.
Watch the gold markets, because they certainly can be indicative of where the Aussie is going, sometimes leading the Aussie, sometimes following. If the gold markets start to take off to the upside, that will confirm what I believe, which is that the US dollar is in trouble. I don't know that is going to happen right away, but I do think that ultimately the markets will come to terms with the fact that the Federal Reserve is nowhere near being able to taper off of quantitative easing, and that of course will drive the value the gold markets much higher, which in turn creates demand for Australian dollars as the Australians export so much of it into the world.
0.9550 is crucial in my opinion.
If we get a daily close above the 0.9550 handle, I firmly believe that this market's next stop will be the parity level. It might take a while to get there, but it's only a matter of time in my opinion. I think that the market will naturally go where the next resistance level is, and that of course is parity. Having said that, it's not that big of a deal to be at parity again, and it has less of a psychological impact now than it did previously. That is because we have busted through it more than once now, and as a result people won't be as freaked out about the occasion.
Going forward, I believe that we will hit parity. I also believe that we will go through that level given enough time. As far as shorting this market is concerned, I see absolutely no way to do it now. Pullbacks should continue to be buying opportunities.
