AUDUSD: Can You Spot the Range?

AUDUSD broke through resistance at 0.9200 today, which had held up to two tests over the last week. This break has been fueled by a weakening US dollar more than a strengthening Australian dollar. The FOMC statement was mildly better than recent ones, with hints that the Fed will begin to ease off the liquidity injections, but keep rates depressed. The implication is for improving financial markets, and a return to growth. This is the same sentiment that we have been getting for the last year and a half, but you shouldn’t be too concerned with the legitimacy of the statement, unless you are trading very long term.

For most of you, your concern is whether the market will believe this sentiment again. History has shown us that it will. Despite the lack of actual change in the underlying fundamentals, the markets have shown that they can look like recovery has taken hold. So the market looks like it is going to run with this bout of risk appetite once again.

AUDUSD has resistance at 0.9300, limiting the topside movement to 100 pips, which is still a good potential for profit. I expect the pair to begin to bounce between 0.9200 and 0.9300 like it did in January, good news for anyone who likes to trade a loose range.