Fed Fallout: AUD/USD falls from false breakout, still in


The Australian dollar showed a lot of strength in recent days and managed to top the 0.89 level on Fed Day. But then came the Fed, and turned everything around.

Yellen and her colleagues not only ended QE, but acknowledged the improvement in job market. AUD/USD fell from the highs, losing support at 0.8820 and also dipping below 0.88. The move above 0.89 proved to be a false break, or an opportunity to go short at resistance. Here is the chart:

AUDUSD falls sharply after erasing gains as Federal Reserve ends QE3 October 2014

Hawkishness from the Fed is quite uncommon and could be clearly seen via the type of dissent: it was dovish. The Fed was not too worried about inflation either. The only thing that wasn’t too hawkish was the phrase about interest rates: they are set to stay low for a considerable time.

There are good reasons for the Fed to be hawkish about the US economy: jobs are growing nicely, and this is seen in the Non-Farm Payrolls, JOLTs (which the Fed eyes) and jobless claims, which are at the lowest since the year 2000.

For Australian policymakers, this is good news: the RBA would like to see a weaker Australian dollar, perhaps as low as 0.85, if we quote a rare statement from RBA governor Glenn Stevens.

More: Short AUD/USD, NZD/USD; Looking To Sell EUR/USD Bounces – BofA Merrill

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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