The Australian Dollar fell in sympathy with the New Zealand Dollar on Wednesday after the Reserve Bank of New Zealand said, “Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next OCR is down. “ The move likely means the Reserve Bank of Australia will follow a similar path with investors already pricing in a rate cut in August.
At 09:05 GMT, the AUD/USD is trading .7104, down 0.0029 or -0.42%.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, trading conditions are very choppy. A trade through .7168 will signal a resumption of the uptrend. The main trend will change to down on a move through .7041.
The minor trend is also up but showing signs of weakening. A new minor top was formed overnight at .7148. The minor trend will change to down on a move through .7065.
Nearly all of the price action the past two weeks has taken place inside a major retracement zone at .7079 to .7153 with the AUD/USD straddling another retracement zone at .7015 to .7129. This has caused extremely choppy trading conditions. The price action is being blamed on traders trying to position themselves ahead of the widely expected rate cut in August.
Daily Technical Forecast
Based on the early price action, the direction of the AUD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the 50% level at .7105.
Bullish Scenario
A sustained move over .7105 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the cluster of resistance at .7128, .7129 and .7133. Sell are likely to re-emerge on the first test of .7128, but the buying could strengthen on a trade through .7133.
Bearish Scenario
A sustained move under .7105 will signal the presence of sellers. The next downside target is a downtrending Gann angle at .7088. This is followed by the main 50% level at .7079.
The main downside targets and major support angles come in at .7068 and .7059. The AUD/USD could plunge into .7030 if .7059 fails as support.