AUD/USD Forecast 14 Nov 2014
The Australian dollar is on the back foot once again after a much stronger than expected retail sales number from the US and expectations that the Australian economy might not sustain its growth trajectory next year unless we see lower interest rates.
The AUD/USD pair has demonstrated some action overnight with yesterday's rally fizzling in light of the recent drop in commodity prices. As oil hit multiyear lows, the US dollar has been one of the strongest performers across the board once more.
There is little reason to believe that the momentum in the US dollar can be easily reversed. Growth in the US economy has stabilized and we have seen retail sales and consumer confidence numbers being reported higher than expected. Hence we would be favoring to buy puts on the AUD/USD pair.
However we would be cautious as to when that might be a good idea. In our case we have seen both key levels to the upside and to the downside having been tested in the last 24 hours. After the Australian dollar failed to rally through 0.8750, it has pulled back towards 0.8650, but hasn't managed a close below a key trend line.
This is why, our preferred strategy this time os to look for a rally towards the high point of the daily range. In particular we would be very keen to buy daily puts around 0.8710 ideally. Also a break to the downside below 0.8650 would trigger a trade from our side.
In case we see a break and an hourly close above 0.8710-0.8715 we would reassess the situation and look for better opportunities to trade this pair. Call buying in that scenario is not out of the question, but we would want to see an hourly close above 0.8720 in order to do that.