AUD/USD Forex Technical Analysis – Trader Reaction to .7083 Sets the Tone; RBA on Tap
The Australian Dollar is trading flat shortly before the release of the Reserve Bank’s (RBA) interest rate and policy decisions at 03:30 GMT.
Traders are not expecting any surprises by the central bank with all 34 economists in the latest Reuters poll looking for the cash rate to remain at 0.10%. However, there is a small majority expecting a rate rise in the first quarter of 2023.
At 02:51 GMT, the AUD/USD is trading .7050, down 0.0001 or -0.02%. The Invesco CurrencyShares Australian Dollar Trust (FXA) ETF is trading $69.94, up $0.41 or +0.59%.
Despite new concerns over the Omicron coronavirus variant, a Reuters poll of economists are now calling for the RBA to raise rates in early 2023, and possibly sooner. The group brought forward their rate hike expectations for the second straight month.
Against a backdrop of rising inflation in Australia and around the world, the RBA is now predicted to lift its cash rate from a record low 0.10% in the first quarter of 2023.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through the November 2, 2020 main bottom at .6991 will reaffirm the downtrend. This could trigger further weakness into the July 16, 2020 main bottom at .6963 and the July 14, 2020 main bottom at .6921.
A move through .7431 will change the main trend to up. This is unlikely, however, due to the prolonged move down in terms of price and time, the market is ripe for a counter-trend rally.
The minor trend is also down. A trade through .7173 will change the minor trend to up. This will shift momentum to the upside.
The minor range is .7173 to .6993. Its 50% level or pivot at .7083 is the first upside target. The second upside target is the pivot at .7182, followed by a short-term retracement zone at .7212 to .7264.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to .7046.
A sustained move over .7046 will indicate the presence of buyers. The first upside target is the pivot at .7083.
Taking out .7083 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with .7173 – .7182 the next target.
A sustained move under .7046 will signal the presence of sellers. If this creates enough downside momentum then look for a retest of last week’s low at .6993, followed by a series of main bottoms at .6991, .6963 and .6921.