AUD/USD Forex Technical Analysis – Trader Reaction to .7437 Sets the Tone Ahead of RBA Policy Decision

The Australian Dollar is edging higher early Tuesday shortly before a Reserve Bank of Australia (RBA) monetary policy decision, due to be released at 04:30 GMT.

Most analysts polled by Reuters expect the RBA to leave the cash rate at 0.1%, but are split on whether the central bank will delay tapering plans as the economy struggles with the fallout of lockdowns in various states.

If the RBA sticks to its plans to taper bond purchases, the Aussie could temporarily jump higher. This will especially hold true since it looks as if the U.S. Federal Reserve will not announce plans for tapering at its September 21-22 policy meeting due to the disappointing headline number in last week’s Non-Farm Payrolls report.

At 01:46 GMT, the AUD/USD is trading .7454, up 0.0017 or +0.23%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7478 will signal a resumption of the uptrend. A move through the July 13 main top at .7503 will reaffirm the uptrend.

The main trend will change to down on a trade through .7222. This is highly unlikely but due to the prolonged move up in terms of price and time, traders should watch for a closing price reversal top chart pattern.

On the upside, the nearest resistance is a long-term 50% level at .7499 and the main top at .7503.

On the downside, the nearest support is the long-term Fibonacci level at .7379.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to .7437.

Bullish Scenario

A sustained move over .7437 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into .7478, followed by the resistance cluster at .7499 – .7503.

The main top at .7503 is a potential trigger point for an acceleration to the upside with the July 6 main top at .7599 the next likely upside target.

Bearish Scenario

A sustained move under .7437 will signal the presence of sellers. The first downside target is .7379. Buyers could come in on the first test of this level. If it fails, we could see a near-term direction into .7292 to .7248.