The AUD/USD pair fell hard during the course of the session on Friday, slicing through the 0.87 level without much hesitation. After all, the nonfarm payroll numbers came out better than expected, and as a result the US dollar strengthened quite a bit during the session. Adding more misery to the situation for the Australian dollar, the gold markets fell apart as well and we all know that the correlation between us to markets is a fairly tight one. With that, the Australian dollar really had no chance of significantly going higher, and it now appears that we could be on the precipice of a significant drop.
As far as I can see the 0.8650 level is massive support, but I believe that we are about to break through there. Once we do, this market is probably going to head all the way down to the 0.80 level. After all, the market has very little to profit up right now, so I believe that we will return to the 0.80 level, an area that looks to be the next significant support level on the longer-term charts, and an area that has been like a magnet for price.
Continued downward pressure.
Looking at this market we have seen continued downward pressure, and I don’t see that changing anytime soon. Don’t get me wrong, we could bounce from here but that’s only going to be a nice selling opportunity as the US dollar continues to be the most favored as set out there at the moment. In fact, I don’t think that it’s possible to buy the Australian dollar until we get above the 0.90 level, which of course would show the trend changing to the upside, and the market will more than likely be quite upset by that move.
I believe that short-term traders will continue to pound this pair every time it tries to rally, and I also know that the central bank of New Zealand has been complaining about and overvalued Kiwi dollar, which wins the thought that perhaps the Australian dollar is overvalued as well at the moment.
