Forex Trading: AUD/USD Appetite Developing?

There are some indications that some risk-averse currency trades are being unwound. As equity markets in Europe and Asia continued to rally overnight and the US market remained relatively flat, a short-term pull back from last week’s rally seems less likely and rather a continuation of last week’s move seems imminent.

Some economists (including Fed chief Ben Bernanke) see the economy flattening out here and perhaps reviving growth in the latter part of ‘09 and some technicals indicate a bottom in commodities with the Baltic Dry Index gaining some momentum. This coupled with Australia’s current financial position in the global arena make it hard not to like the Aussie.

The chart below is showing the AUD/USD pair found some strong resistance to start the week at the 61.8% retracement, with some support from the 4-21hour moving average. We will look for a penetration of this level and a rally in commodity prices to push the pair toward the early February highs.

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