AUD/USD Forex Technical Analysis – May Straddle Fibonacci Level at .6925 Due to Low Holiday Volume

The Australian Dollar is holding firm early Tuesday near a 4-1/2 month high on optimism about U.S.-China trade relations. The trade is expected to be subdued today due to bank holidays in Australia on Tuesday and Wednesday. U.S. banks will also be closed on Wednesday due to the Christmas holiday.

At 07:38 GMT, the AUD/USD is trading .6920, down 0.0003 or -0.04%.

On Monday, the AUD/USD hit its highest level since late July after China said it will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year as Beijing looks to boost imports amid a slowing economy and a trade war with the United States.

Generally speaking, waning concerns over geopolitical risks and strong demand for higher-yielding currencies are the primary catalysts behind the Aussie’s strength. Furthermore, a weaker-than-expected U.S. durable goods report for November pushed Treasury yields lower, making the U.S. Dollar a less-attractive asset.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6939 will signal a resumption of the uptrend. The main trend will change to down on a move through the last swing bottom at .6838.

The short-term range is .6754 to .6939. Its retracement zone at .6846 to .6825 is support.

The intermediate range is .6671 to .6939. Its retracement zone at .6805 to .6773 is even stronger support.

Daily Swing Chart Technical Forecast

The main range is .7082 to .6671. Its retracement zone at .6876 to .6925 is currently being tested. This zone is controlling the longer-term direction of the AUD/USD. Crossing to the strong side of this zone will put the Forex pair in a strong position since there is no resistance until the July 19 main top at .7082.

Based on the early price action, the direction of the AUD/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the main Fibonacci level at .6925.

Bullish Scenario

A sustained move over .6925 will indicate the presence of buyers. Taking out the last main top at .6939 will indicate the buying is getting stronger.

The daily chart indicates there is plenty of room to the upside with .7082 the next likely upside target.

Bearish Scenario

A sustained move under .6925 will signal the presence of sellers. If this move is able to attract enough sellers, we could see a pullback into the main 50% level at .6876.