AUD/USD Forex Technical Analysis – Testing Major Support Zone at .7579 – .7523 after Dovish RBA Comments

The Australian Dollar is trading lower on Friday after comments from the Reserve Bank of Australia (RBA) took the air out of thoughts of further upside activity. Reuters reported early Friday that although Australia’s economy performed better than expected over the past year, very significant monetary support will still be needed for some while yet, according to the country’s top central banker.

At 03:14 GMT, the AUD/USD is trading .7588, down 0.0012 or -0.16%.

The RBA this week left its cash rate at a record low 0.1%, but surprised by extending its quantitative easing program by another A$100 billion ($76.01 billion) from mid-April.

Speaking before a parliamentary economics committee in Canberra, Governor Philip Lowe said these settings will need to be maintained until inflation reaches the RBA’s 2-3% target range.

In other news, the total value of retail sales in Australia was down a seasonally adjusted 4.1 percent on month in December, the Australian Bureau of Statistics said on Friday – coming in at A$30.368 billion. That follows the 7.1 percent spike in November.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, a trade through .7564 will signal a resumption of the downtrend. The main trend will change to up on a move through .7764.

The minor trend is also down. A trade through .7704 will change the minor trend to up. This will also shift momentum to the upside.

The main range is .7339 to .7820. Its retracement zone at .7479 to .7523 is the next downside target. This zone is controlling the longer term direction of the AUD/USD.

On the upside, resistance is a pair of 50% levels at .7664 and .7692.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Friday will be determined by trader reaction to .7579.

Bullish Scenario

A sustained move over .7579 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for an eventual retest of the minor 50% level at .7664.

Bearish Scenario

A sustained move under .7579 will signal the presence of sellers. The first target is this week’s low at .7564, followed closely by a minor bottom at .7557. If both fail to hold then look for the selling to possibly extend into the main Fibonacci level at .7523.

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