The AUDUSD pair initially tried to rally during the course of the session on Monday, but turn right back around to form a bit of a shooting star.

However, we have an interest rate decision coming out of Australia today, so it’s very likely that we will get a lot of volatility. At this point in time, and looks as if the market is going to continue to consolidate overall, but one thing that you will have to pay attention to on the outside will be gold (GLD, quote) markets as well. If they go higher, typically the Australian dollar will as well. With this, I feel that the market is probably going to be very choppy and difficult to navigate over the course of the next day.

If we can break above the 0.77 handle, that is a market that should continue to go much higher, and give us an opportunity to reach towards the 0.80 level which is the large, round, psychologically significant barrier that the market will continue to be attracted to over the longer term. However, if we break down below the 0.74 level, the market should then reach down to the 0.73 level, and then below there which of course sends this market looking for the 0.71 level after that. Nonetheless, the market continues to show a lot of volatility, and with this is likely that the market will be very choppy and very dangerous to trade. As far as longer-term trades are concerned, it’s difficult to imagine taking a long-term trade at this point in time, because quite frankly this is a market that continues to struggle and of course show real signs of volatility.

I do believe that ultimately the Aussie probably goes higher due to the gold markets, but at this point in time they are not broken out to the upside yet. With this, we could get a bit of a pullback in the short-term that could offer a bit of value, but I would most certainly wait for some type of supportive candle before I put money to work on the upside. Short-term traders may be able to sell after the announcement, but that of course is risky as always.

Editor’s Note: Equity investors/traders can use the Currency Shares Australian Dollar Trust (FXA, quote) ETF to take positions in the Aussie dollar without a FOREX account.  The ETF looks to track the price of the Aussie dollar (AUDUSD), minus ETF fee. The fund seeks to reflect the price of the Aussie dollar (AUDUSD) with the shares representing a cost-effective investment relative to investing in the FOREX market.

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