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James Hyerczyk

The Australian Dollar closed lower on Tuesday after an early attempt to take out Monday’s high at .7443 failed to attract enough buyers to complete the move. Sellers came in hard after the buying stopped in reaction to hawkish comments from Fed Chairman Jerome Powell and another robust U.S. industrial production report for June.

The AUD/USD settled on Tuesday at .7388, down 0.0033 or -0.44%.

“With appropriate monetary policy, the job market will remain strong and inflation will stay near 2% over the next several years,” Powell told the U.S. Senate Banking Committee.

“With a strong job market, inflation close to our objective, and the risks to the outlook roughly balanced, the FOMC believes that – for now – the best way forward is to keep gradually raising the federal funds rate.”

In other news, U.S. Industrial Production rose 0.6% in June, edging slightly higher than the estimate of 0.5%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7484 will change the main trend to up. A move through .7360 will signal a resumption of the selling pressure.

The main range is .7677 to .7310. Its retracement zone at .7494 to .7537 is resistance.

The intermediate range is .7310 to .7484. Its 50% level or pivot is .7397. Closing below this level makes it resistance.

The short-term range is .7484 to .7360. Its 50% level or pivot at .7422 is also resistance.


Daily Swing Chart Technical Forecast

Based on Tuesday’s close at .7388, the direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the intermediate 50% level at .7397.

A sustained move under .7397 will indicate the presence of sellers. This could fuel a break into the main bottom at .7360. Taking out this bottom could create the downside momentum needed to challenge the next main bottom at .7310. This is a possible trigger point for a further acceleration to the downside with the next major target the December 23, 2016 main bottom at .7159.

A sustained move over .7397 will signal the presence of buyers. However, the initial move could be labored with potential resistance .7422 and .7443.

Taking out .7743 will erase yesterday’s losses and signal the emergence of strong buying. This could fuel a rally into last week’s high at .7484. Taking out this level will change the trend to up, but a test of the retracement zone at .7494 to .7537 could bring in new sellers.

The divergence between the monetary policies of the hawkish Federal Reserve and the dovish Reserve Bank of Australia continues to control the price action. Bearish traders are using this information to sell just about every rally.

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