AUD/USD Forex Technical Analysis – Downside Momentum Could Drive Aussie into .7202 then .7179

The Australian Dollar is trading lower on Tuesday despite potentially dovish comments from a high ranking Federal Reserve official and weaker-than-expected U.S. economic data. Traders are saying that a steep drop in iron ore prices because of lower demand from China was the main catalyst for the weakness.

In the U.S., Federal Reserve Vice Chairman Richard Clarida said the central bank was “much closer” to a neutral rate. The Home Price Index (HPI), the S&P/CS Composite-20 HPI and the Conference Board’s Consumer Confidence report all came in below their forecasts. In Australia, iron ore prices fell by 6% overnight in China.

At 1710 GMT, the AUD/USD is trading .7222, down 0.0003 or -0.05%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7164 will change the main trend to down. A move through .7338 will signal a resumption of the uptrend.

On the upside, the retracement zone resistance is .7252 to .7307. This zone has provided resistance for eight consecutive sessions.

The short-term range is .7020 to .7338. Its retracement zone at .7179 to .7141 is the primary downside target and support. Inside this zone is the main bottom at .7164.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .7222, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the 50% level at .7252.

Bullish Scenario

A sustained move over .7252 will indicate the presence of buyers. If this move can generate enough upside momentum, we could see an eventual move into the Fibonacci level at .7307.

Bearish Scenario

A sustained move under .7252 will signal the presence of sellers. The first downside target is the recent low at .7202. This is followed by the 50% level at .7179, the main bottom at .7164 and the Fibonacci level at .7141.