AUD/USD Forex Technical Analysis – July 25, 2016 Forecast

The AUD/USD is trading slightly higher and inside Friday’s range as investors await key inflation data due to be released early Wednesday that could determine whether the Reserve Bank of Australia cuts its benchmark interest rate next month.

The majority of investors polled expect the RBA to cut its key interest rate next month but the central bank is awaiting more information, including the Consumer Price Index. Last week, the RBA’s July meeting minutes, confirmed the central bank has a dovish bias.

The main trend is up according to the daily swing chart. However, momentum has been down since the AUD/USD posted a closing price reversal top on July 15.

The main range is .7145 to .7675. Its retracement zone is .7410 to .73475. This is the primary downside target.

The intermediate range is .7285 to .7675. Its retracement zone at .7480 to .7434 is currently being tested.

The new short-term range is .7675 to .7442. If a support base develops inside the intermediate retracement zone, we could see a retracement back to the short-term retracement zone at .75585 to .7586.

Based on Friday’s close at .7461 and the early price action, the direction of the AUD/USD today is likely to be determined by trader reaction to the intermediate 50% level at .7480.

A sustained move over .7480 will indicate the presence of buyers. This could lead to a test of a minor high at .7417. Taking out this level could trigger an acceleration into a downtrending angle at .7555.

The inability to overcome .7480 will signal the presence of sellers. The first downside targets are Friday’s low at .7442 and a price cluster at .7435 to .7434. This is followed closely by an uptrending angle at .7420 and the main 50% level at .7410.

So basically, we’re looking at wide price cluster at .7435 to .7410. This should lead to a labored break, however, taking out .7410 will likely fuel an acceleration to the downside with a major uptrending angle at .7365 the next target.

Watch the price action and read the order flow at .7480 today. Trader reaction to this level will tell us if the buyers or sellers are in control today.