The AUD/USD pair has been brutally beaten over the last several months, and quite frankly looks about as sick as it could possibly be. However, the 0.90 level has been rather supportive, and at the time of this writing has still held firmly.
It will be very important to look at the 0.90 level in the near future. If the pair moves below the 0.90 handle, it would not be impossible to eventually reach 0.80 by the time this move is said and done. What is quite interesting is that this pair has absolutely collapsed, but there has been no significant bounce. Even though this level has held, it hasn't exactly made prices skyrocket.
It's All About Asia
This pair is being driven by what's been seen in Asia, with China being the main driver. Asian economies look a little sluggish at the moment, and because the Australians provide so much in the realm of raw materials to the Asians, it is understandably hurting the Australian economy. This seems to be the main driver at the moment, because even as the US dollar has pulled back recently, the Australian dollar has not been able to gain any serious traction.Simply put, if the pair can get a daily close below 0.90, it may absolutely crater. In fact, this could be one of the better trades for the month of August, and possibly even the rest of the year. On the other hand, rallies will more than likely offer selling opportunities, with a special interest being placed on the 0.95 handle. If the pair gets above there, it may be time to run towards parity. Quite frankly though, unless there is something seriously amiss, it doesn’t seem likely that this pair is going to be particularly strong in August 2013. Sure, there is the possibility of a "dead cat bounce", but if so, this may only create a selling opportunity. Traders will to show some patience may be very satisfied with their decision. I will not be shorting this until we get a daily close below 0.90, but when we do I will be all in.
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