AUDUSD has been quite coy lately, bouncing strongly in between two major Fib levels, then breaking down before it could reach a good bounce point. It’s mostly reacting to the schizophrenic US dollar, [see: May 6 Update on DX] which has been all over the map in an effort to prop up stocks.
AUD reached our .6897 target last September, but couldn’t seal the deal on .6584 before plunging stock prices sent it soaring. From 2011 through 2015, a rising dollar (i.e. rising USDJPY) sent stocks higher. Since the start of the year, however, CL has taken over the job of driving up stocks. And, when CL rises, the USD generally falls, which drives AUDUSD higher.
That’s why AUDUSD’s breakdown over the past two weeks is so interesting and, potentially, so important.
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