The direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to .7090.
The Australian Dollar is trading lower on Tuesday after a successful test of a minor 50% level. The early pressure was fueled by fresh concerns about the spread of the Omicron variant of COVID-19, hurting sentiment and the risk-sensitive currency. Gains were also being capped by position-squaring ahead of the start of the U.S. Federal Reserve’s two-day policy meeting later today.
At 11:11 GMT, the AUD/USD is trading .7122, down 0.0013 or -0.18%. On Monday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $70.73, down $0.42 or -0.59%.
Uncertainty about the Omicron coronavirus variant rattled investors who sought the safety of haven assets like the U.S. dollar and bonds, which also benefited from expectations of a hawkish Federal Reserve meeting this week.
The Federal Reserve kicks off its two-day meeting on Tuesday. The central bank will release a statement on Wednesday with quarterly projections for the economy, inflation and interest rates. Chairman Jerome Powell will also hold a press conference.
The main trend is down according to the daily swing chart. However, momentum is trending higher.
A trade through .7187 will change the main trend to up. A move through .6993 will signal a resumption of the downtrend.
The minor trend is up. This is controlling the momentum.
The minor range is .6993 to .7187. Its 50% level at .7090 is support. This level stopped the selling earlier in the session.
On the upside, the nearest resistance is a pair of 50% levels at .7182 and .7212. The primary upside target is the short-term retracement zone at .7275 to .7341.
The direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to .7090.
A sustained move over .7090 will indicate the presence of buyers. This could lead to a labored rally with the first target a minor pivot at .7139. This is followed by a small resistance cluster at .7182, .7187 and .7212.
A sustained move under .7090 will signal the presence of sellers. This could trigger an acceleration to the downside with the next major target a support cluster at .6993, .6991 and .6963.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.