AUD/USD Forex Technical Analysis – Hovering Above 2020 Bottoms Ahead of Tuesday’s RBA Meeting

The Australian Dollar is inching higher early Monday following upbeat comments from Treasurer Josh Frydenberg on the economic prospects for 2022. The news seems to have offset worries about the Omicron coronavirus variant. Nonetheless, traders remained cautious ahead of the Reserve Bank (RBA) meeting on Tuesday.

At 07:22 GMT, the AUD/USD is trading .7017, up 0.0016 or +0.23%. On Friday, the Invesco CurrencyShares Australian Dollar Trust (FXA) ETF settled at $69.50, down $0.89 or -1.27%.

Frydenberg on Sunday said Australia will raise its 2022 economic growth forecast at the mid-year budget review, adding that it is too early to estimate the impact from Omicron on the economic outlook.

Investors were also awaiting the Reserve Bank of Australia’s (RBA) meeting on Tuesday, where the cash rate is expected to be held at 0.10%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the November 2, 2020 main bottom at .6991 will reaffirm the downtrend.

The nearest main top is .7431. A trade through this level will change the main trend to up. This is highly unlikely, but due to the prolonged move down in terms of price and time, the AUD/USD starts today’s session inside the window of time for a closing price reversal bottom. This won’t change the trend, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend rally.

The minor trend is also down. A trade through .7173 will change the minor trend to up. This will shift momentum to the upside.

The minor range is .7173 to .6993. Its 50% level at .7083 is the nearest resistance.

The second minor range is .7371 to .6993. Its 50% level at .7182 is the next resistance, followed by the short-term resistance zone at .7212 to .7264.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7000.

Bullish Scenario

A sustained move over .7000 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into the first pivot at .7083.

Since the main trend is down, look for sellers on the first test of .7083. Overtaking it, however, could trigger an acceleration to the upside with the next target a price cluster at .7173 – .7182.

Bearish Scenario

A sustained move under .7000 will signal the presence of sellers. This could trigger a labored break with potential targets lined up at .6993 – .6991, .6963 and .6921.