The land down under is largely dependent on metal ores. So it is no wonder that the Aussie dollar (AKA Mr. Aussie) dropped on weak iron ore prices. This drop almost confirmed a break below our pivot level of 0.76 in the AUD/USD pair.
Easter holidays brings bank holidays in Australia (and NOT in the US which is ridiculous) any moves we see in Aussie crosses would be driven by his counterparts. But for a longer term point of view, we need to analyze both parties so let’s get into technical details.
USD’s Fate in the Hands of NFP
Ms. USA didn’t show as much moves as we would expect when the US jobless claims dropped by 20,000 to 268,000 in the week ending March 28 below expectations of 285,000. Separated data showed US trade deficit declined by 17% in February to $ 35.4 billion, posting the lowest level since 2009.
She could be in a crabby mode because just like many other currencies, she want’s the US banks to go on holiday this Friday as well.
But instead of an Easter/ Passover holiday, we have the all important Non-Farm Payroll (NFP) coming up on Friday which could shake things up a little bit.
If the US we find out tomorrow that the US has continued to create more jobs in the past month, that would mean further drops for the AUD/USD pair especially since Mr. Aussie will be MIA on Easter holidays.
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AUD/USD Trading Strategy
The pair almost confirmed a break below the pivot level of 0.76 and approaching the lower band of Mr. Bollinger. To top that, the MACD line has also crossed below the Signal line and as I have explained in our Trading Lessons, this could be yet another bearish signal for the pair.
So here is what I think would happen:
Once the pair confirms the break below 0.76, we would see a correction. The pair could even make it back to the 23% Fibonacci level at 0.80. However, with the bearish sentiment still on, we may eventually see drops to 0.73 and more!
The last time Mr. Aussie danced this low against Ms. USA was in Spring of 2009, and they went all the way down to 0.60. Will history repeat itself?
For more on what a strong US Dollar can mean for different economies, checkout this week’s video.