AUDUSD - Looks Strong but for how Long?

Well the AUDUSD has seen a good recovery in the run up to, and post government elections.  But is simply changing governments enough to sustain the recent gains?  Change is often for the better, but there are plenty who are still sceptical of its recent run and believe that a lower exchange rate is still needed in order to rebalance the local economy, not just a change in government.




 The issue is that high bond yields persist which is what is still attracting investors to the AUD and is why the currency remains strong (relatively).  But whether the devaluing happens endogenously or whether its from further rate cuts from the central bank (RBA), which they certainly have scope to do at 2.50%, consensus is that something might still have to happen.

Technically there is certainly some potential on the upside as we haven't yet reached the 38.2% retracement of the April-Aug down move which is at 0.9506.  If playing from the long side, trading strategies will involve riding a long position on a break (and close) of 0.9350 up to 0.9600, as noted on previous blog posts, placing a stop incase of the 'fakeout'.

Trading from the short side, you would be trading the 0.9300-0.8850 range.


Charts sourced from ig.com