Options Markets are Probably Watching Also

It's also an area that I think a lot of people have been probably paying attention to via the options markets. With this being said, I think you've got a scenario where we probably have more of a buy on the dip attitude, whether that's right or not in this AUD/USD market. The 0.64 level is also support followed by the 0.625 zero level.

(Click on image to enlarge)

I don't like the Australian dollar, despite the fact that you can look at the chart and say, hey, it might be oversold. At this point in time, I think there's far too many issues out there to start taking a lot of risk with commodity based currencies. And on Wednesday, we get CPI coming out of Australia as well as an interest rate decision coming out of New Zealand, like 30 minutes later, so there could be a lot of unnecessary volatility early on Wednesday, that traders can avoid.

If we do turn around a rally from here, perhaps breaking above the 0.6550 level, then it opens up the possibility of a move to the 50-day EMA that's just above the 0.66 level. Either way, you are somewhat swimming upstream, and until we get some type of fundamental reason for the US dollar to start selling off drastically, I think this is a pair that's going to be more or less fade the rallies going forward. Having said that, that’s been the case for some time.

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