AUD/USD Forex Technical Analysis – Straddling .7499 Pivot; Strengthens Over .7504, Weakens Under .7465
The Australian Dollar reached its highest level since July 13 early Wednesday after the Reserve Bank (RBA) minutes from the previous day showed it expects the economy to return to growth in the current quarter after an outbreak of the Delta variant of COVID-19 derailed a recovery, but still does not expect to raise interest rates until 2024.
At 05:51 GMT, the AUD/USD is trading .7493, up 0.0018 or +0.25%.
The RBA slashed its official cash rate to a record low of 0.1% last year to support the economy during the pandemic, and has since consistently said it does not expect to raise interest rates before 2024 given sluggish wages growth and inflation. However, the price action suggests that investors don’t believe the RBA and are betting on an earlier than expected rate hike.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Tuesday when buyers took out the September 3 main top at .7478. A trade through .7226 will change the main trend to down.
The minor trend is also up. A trade through .7379 will change the minor trend to down. This will also shift momentum to the downside.
The AUD/USD is currently trading inside a major retracement zone at .7379 to .7499. This zone is controlling the longer-term direction of the Forex pair.
Daily Swing Chart Technical Forecast
The direction of the Australian Dollar the rest of the session on Wednesday is likely to be determined by trader reaction to .7475.
A sustained move over .7475 will indicate the presence of buyers. Overtaking the long-term 50% level at .7499, the July 13 main top at .7503 and the intraday high at .7504 will indicate the buying is getting stronger.
If the move over .7504 is able to generate enough upside momentum then look for an acceleration to the upside. The daily chart indicates there is no major resistance until the July 6 main top at .7599 and the June 25 main top at .7617.
A sustained move under .7475 will signal the presence of sellers. The first downside target is a minor pivot at .7442. Buyers could come in on the first test, but if it fails then look for the selling to possibly extend into the support cluster formed by the minor bottom and Fibonacci level at .7379.
Due to the prolonged move up in terms of price and time, the AUD/USD is currently trading inside the window of time for a closing price reversal top. A close under .7475 will form this chart pattern. If confirmed, it could trigger the start of a 2 to 3 day correction.