James Hyerczyk
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The Australian Dollar is struggling for direction early Wednesday, as investors awaited updated U.S. consumer price data. Meanwhile, dovish comments from the Reserve Bank of Australia (RBA) helped nudge 10-year yields to their lowest since February at 1.525%. In other news, Wespac analysts continued to express surprise in the lack of upside movement by the Aussie given the rise in commodity prices.

At 05:23 GMT, the AUD/USD is trading .7740, up 0.0003 or +0.03%.

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Volume remains below average with most of the major institutions on the sidelines ahead of Thursday’s U.S. inflation report with most expecting the Federal Reserve, which meets on June 15-16, to consider the rise in inflation as transitory when it comes to policy tapering.

RBA Assistant Governor Chris Kent on Wednesday downplayed the risks of inflation domestically and globally noting inflation expectations had only returned to where they were a few years ago.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7774 will change the main trend to up. A move through .7646 will signal a resumption of the downtrend.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is resistance. This zone has stopped several rallies the past few months.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is potential support. This area has stopped several breakdown attempts over the past few months.


Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the main 50% level at .7770.

Bullish Scenario

A sustained move over .7770 will signal the presence of buyers. If it creates enough upside momentum then look for buyers to take out the main top at .7774. This will change the main trend to up. Extending the rally through this level could lead to eventual tests of main tops at .7796 and .7814 as well as the main Fibonacci level at .7826. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under .7769 will indicate the presence of sellers. This could trigger a break into the short-term 50% level at .7711. If this potential support fails to hold then look for the selling to possibly extend into the short-term Fibonacci level at .7769 over the short-run.

For a look at all of today’s economic events, check out our economic calendar.
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