AUD/USD Forex Technical Analysis – Next Challenge is .7048 – .7099 Retracement Zone

The Australian Dollar is inching lower against its U.S. counter-part early Wednesday after highly-anticipated data on wages came out softer than expected, dampening calls for faster rate hikes and sending bond yields lower. Additionally, early buyers failed to clear a key resistance level despite closing on the high of a three-day rally the previous session.

At 05:31 GMT, the AUD/USD is trading .7024, down 0.0007 or -0.10%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) is trading $69.46, up $0.41 or +0.59%.

After months of anticipation ahead of the wages report, the actual figures were a letdown. Wages rose only a modest 0.7% in the first quarter, nudging annual growth up a fraction to 2.4%. That was below the median forecasts of 2.5%.

Bullish traders were really hoping for a 2.7% or reading or higher. This would have pushed the Reserve Bank of Australia (RBA) to hike its benchmark interest rate by more than 25 basis points in June.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend. A move through .7266 will change the main trend to up.

The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift the momentum.

The short-term range is .7266 to .6829. It retracement zone at .7048 to .7099 is resistance.

The minor range is .6829 to .7047. Its pivot at .6941 is the nearest downside target.

Daily Swing Chart Technical Forecast

Trader reaction to .7048 will likely determine the direction of the AUD/USD on Wednesday.

Bearish Scenario

A sustained move under .7047 will indicate the presence of sellers. If this move creates enough downside momentum then look for a pullback into the pivot at .6941.

Trader reaction to this level should determine the near-term direction of the AUD/USD. Counter-trend buyers are going to stop the price slide and form a secondary higher bottom, or sellers will continue to drive prices into at least .6829.

Bullish Scenario

A sustained move over .7047 will signal the presence of buyers. Taking out .7053 will change the minor trend to up and could create the upside momentum needed to challenge .7099, followed closely by .7144.