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The AUD/USD pair fell during the session again on Thursday, but bounced quite significantly from the 1.02 level. This level should end up being quite supportive as we have seen time and time again that buyers will step into the market in this general vicinity.
With the Federal Reserve ready to crank out US dollars as much is needed, there is a real chance of this pair will continue to rise over time regardless of the fact that the Reserve Bank of Australia is more than likely going to be cutting rates. This is going to be more of a move towards than interest-rate differential, although interest rates in Australia will remain higher than in the United States wants this rate cutting cycle is over with.
We see the US dollar is being very vulnerable at this point time, and as such this nice predictive and symmetrical consolidation area is something that catches our attention. We don't necessarily think that this will be the beginning of some great melt of in this market, rather a serious attempt to reach 1.04, and then possibly the 1.06 level as the top of this massive consolidation area.
If we do manage to break down of that, we could see a move towards parity, but we don't think that this market goes much lower than that in the end. In fact, we think that one the Australian dollar falls; it is simply an invitation to buy at cheaper rates.
Obviously, you need to pay attention to the gold markets, but they presently look like they are pressed of against the $1800 level, and if that area gives way they could begin to pick up momentum which of course should drag the Australian dollar up with it.
With the nonfarm payroll numbers coming out later today, this will be a gauge as to whether or not the Federal Reserve will have to continue to stimulate via quantitative easing. Odds are this will be the case, as the Federal Reserve has recently stated that they will do this as long as needed, which doesn't exactly sound like they were convinced the economy was turning the corner.