AUD/USD Bears Could Re-Emerge on Test of .7140 – .7181

The Australian Dollar is trading slightly higher early Wednesday as a global stock market rally continued to drive demand for the risk sensitive currency, while traders assessed the impact of the Reserve Bank (RBA) policy statement released on Tuesday.

At 05:29 GMT, the AUD/USD is trading .7136, up 0.0006 or +0.09%. On Tuesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $70.50, up $0.43 or +0.61%.

The RBA is still sounding dovish, but did open the door to a rise in the 0.1% cash rate later this year if the economy continued to surprise with its strength.

RBA Governor Philip Lowe on Tuesday said there were now clearly scenarios where rates could rise, a shift from his previous stance that a move was unlikely in 2022.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6967 will signal a resumption of the downtrend. A move through .7277 will change the main trend to up.

The short-term range is .7314 to .6967. Its retracement zone at .7141 to .7181 is currently being tested.

The main range is .7556 to .6967. Its retracement zone at .7262 to .7331 is the primary upside target.

The minor range is .6967 to .7146. Its retracement zone at .7056 to .7035 is the nearest support area.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to .7141.

Bullish Scenario

A sustained move over .7141 will indicate the presence of buyers. Taking out the intraday high at .7146 will indicate the buying is getting stronger. This could trigger a surge into .7181.

The Fibonacci level at .7181 is a potential trigger point for an acceleration into .7262 to .7331.

Bearish Scenario

A sustained move under .7140 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor retracement zone at .7056 to .7035.

Side Notes

Since the main trend is down, sellers could re-emerge on a test of .7141 to .7181. They are going to try to form a potentially bearish secondary lower top.

On the downside, aggressive counter-trend buyers could come in on a test of .7056 to .7035. They may try to form a potentially bullish secondary higher bottom.