James Hyerczyk
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The Australian Dollar was under pressure on Friday after the RBA’s latest forecasts in the Statement on Monetary Policy (SoMP) showed Australian inflation is no longer expected to reach the lower bound of the 2%-to-3% inflation target within the forecast period, which doesn’t end until December 2021. The news also offset the optimism being generated by the progress of the trade talks between the United States and China.

On Friday, the AUD/USD settled at .6859, down 0.0040 or -0.58%.

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The Aussie was also pressured by rising U.S. Treasury yields which hit their highest levels since early August, making the U.S. Dollar a more attractive investment.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top at .6930 on October 31.

A trade through .6930 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through .6809.

The minor trend is down. This confirms the shift in momentum to down.

The main range is .7082 to .6671. Its retracement zone at .6877 to .6925 has proven to be valid resistance, having stopped the rally.

The short-term range is .6671 to .6930. Its retracement zone at .6800 to .6770 is the next downside target.


Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at .6859, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the main 50% level at .6877.

Bearish Scenario

A sustained move under .6877 will indicate the presence of sellers. If this move can create enough downside momentum then look for the selling to eventually extend into the main bottom at .6809 and the short-term 50% level at .6800.

Bullish Scenario

A sustained move over .6877 will signal the presence of buyers. This move is likely to lead to a retracement of the break from .6930. It will be designed to set up the secondary lower top, which will attract more selling pressure.

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