As Fed Chairman Ben Bernanke finishes what will be likely his final testimony on the hill today has the U.S. dollar regained its strength as market participants speculate on the Fed’s unwinding $85 billion bond purchasing program late this year.
The return to sentiment that the Fed will likely begin to unwind/taper its monetary asset purchasing program in the near future has given added strength on our short Aussie – long U.S. dollar trade.
We have been hammering the view since early April and the trend remains intact.
I’ve written several times on the premium side that I’m looking for the AUD/USD to push as low as the 0.90.
My playbook remains the same since the beginning – On a daily chart of the AUD/USD draw a downward trendline from April through today. Price action has respected the trendline from since April and each time price has retraced towards the trendline it has been a great opportunity to add to or start a position. My rule is simple add to the position when price returns to the trendline and exit when price moves 20 pips above the trendline.
Those interested in gaining access through the Aussie ETF (FXA, quote) can easily follow with the ETF with one exception. Use the AUD/USD FOREX chart to track the currency pair as the FXA will jump around at the opens and closes to catch to the spot price in the FOREX market.