Downside limited for the Australian Dollar
The AUD/USD binary options forex pair has entered a phase of consolidation. After last weeks great call we pause to reassess the perspectives before these two major currencies. Buying puts on rallies towards last nights highs remains the theme for now.
Jannet Yellen has slammed Quantitative Easing program
Future Federal Reserve Chairman Jannet Yellen has slammed expectations of tapering the Quantitative Easing program by the FED anytime soon. Last night after she released her prepared remarks the US Dollar has tumbled across the board.
A major beneficiary has been the Australian dollar which was trading at 0.9330 before the news. After the release of the statement, it spiked higher to 0.9387 before subsiding in late Asia and dropping back to trade at levels as low as 0.9280 during the European session.
With the US session kicking off and future chairman Yellen back on the news wires confirming her assessment of the economy in front of the Senate banking committee, the USD was on the back foot once again.
We would be buying puts on an hourly basis at levels above 0.9365-70. We could have a couple of opportunities to do so in Asian trading, if some volatility arises from China releasing its foreign direct investment data. Further rallies above 0.9375 would be met with caution by us, we would wait out until a retest of yesterdays highs at 0.9387.
The downside will be invalidated if we see a sustained hourly break of 0.9390, in that case we would switch our strategy to buying calls on an hourly basis. Stay tuned for more information on this pair.