Good day forex traders.
In the previous review of the AUD/USD, we explored the long term bullish potential of this currency pair. Namely because of the interest rate differential and the resource rich Australia economy. Having said so we must not forget that due to the nature of the foreign currency exchange market, short term disconnects from fundamental aspects are inevitable.
Looking at the AUD/USD daily chart above, we can see that the currency pair has fallen into a crucial region of support and resistance. This is probably due to the flood of negative sentiments overflowing from the Euro Zone budget deficit crisis rather than the fundamentals of Australia itself. It is interesting to note too that gold is taking quite a hit too.
From a technical point of view, if this region fails, we may be looking at further bearish momentum. While the AUD/USD has no euro in the picture, it is critical to play attention to the developments in the Euro Zone given the inter-connectivity of the global financial market. Folks with proper money management may consider adding to their long term bullish perspectives. Do note however there is a very real risk of a break down if the situation in the Euro Zone deteriorates and hence again proper money management must be in place before any speculations.
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