AUD/USD Forex Technical Analysis – August 5, 2019 Forecast

The Australian Dollar is falling on Monday as investors continue to relieve themselves of commodity-linked, higher-yielding assets in the wake of President Trump’s announcement of additional tariffs on China on August 1. Australia’s exposure to China’s economy is raising concerns over a further decline in Australian economic growth.

The Reserve Bank of Australia is also scheduled to meet on Tuesday. Traders weren’t expecting the RBA to cut rates at this meeting, but given the circumstances, they may be increasing the chances of such a move.

At 09:38 GMT, the AUD/USD is trading .6758, down 0.0042 or -0.62%.

Also weighing on the Aussie is a steep plunge in Chinese Yuan. Fearful of the impact on global growth, investors are dumping export-oriented Asian currencies. Chinese authorities allowed the Yuan to break through the psychologically important level of 7 per dollar. This is its lowest level since the 2008 financial crisis.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Monday when sellers decisively took out the low of the year at .6764. This area is critical because there is no support until the March 3, 2009 bottom at .6285.

Right now it’s all about momentum and the sellers are in control. Given the lack of support, the only way to stop the price slide is with the formation of a dramatic closing price reversal bottom. Although this move will likely be driven by aggressive short-covering, it could relieve some of the selling pressure.

We may see some aggressive counter-trend buying and bottom-picking, but the professionals are short. They are playing for a major sell-off.

Daily Technical Forecast

Given the early price action on Monday, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to Friday’s close at .6801.

Look for the bearish tone to continue as long as the AUD/USD remains under .6801.

Overtaking and sustaining a rally over .6801 could generate some upside pressure in the form of profit-taking, short-covering and perhaps some aggressive counter-trend buying. A close over this level could generate the momentum needed for an explosive 2 to 3 day rally.