AUD/USD has gained 150 pips during the last several days. But what war the trigger, and is it really the start of a new rally?
It’s always worth watching market sentiment, and its reaction to economic events. If an indicator prints above expectations and the currency can't show strong appreciation, it’s a sign of looming retreat. Today we saw better-than-forecasted change out of Australia and AUD/USD is not holding its initial gains.
If there is a single trigger driving the currency up, wait for correction. Yesterday, the only driver of AUD/USD was large option expiry. That’s it.
If an asset with a strong correlation to a currency is going up, and the currency lags behind, it’s time for retracement. Today, gold, playing a big role in lives of both Australia's economy and its currency, added 0.22% during the day. And AUD is tittering around 0%.
I think it’s time to sell AUD/USD with initial target at 0.7880, followed by 0.7840 if broken.