AUD/USD Forex Technical Analysis – Trader Reaction to .7598 Pivot Sets the Tone

The Australian Dollar is trading nearly flat early Tuesday shortly after the Reserve Bank (RBA) kept its official cash rate at 0.10% while reiterating it would not raise interest rates until the unemployment rate falls to 4% and inflation enters the 2% – 3% target band.

At 06:38 GMT, the AUD/USD is trading .7648, down 0.0003 or -0.04%.

The Aussie could move higher today as traders try to figure out why Treasury yields and the U.S. Dollar are not reacting positively to good U.S. economic news. Some are suggesting the market is entering a phase where the U.S. Dollar is no longer a safe haven and more of a ‘risk on” currency.

The U.S. Dollar has generally risen as stocks gained over the past few months. Investors are now watching to see if that relationship may have shifted. If it does then this could fuel a rally in the Australian Dollar.

Aussie traders are also monitoring the Australian money markets. If they start to show signs of an earlier than expected rate hike by the RBA then look for the AUD/USD to sell-off.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7664 will change the main trend to up. A move through .7532 will reaffirm the downtrend.

The minor range is .7664 to .7532. Its 50% level at .7598 is potential support. Aggressive counter-trend buyers could come in on a test of this level in an effort to form a potentially bullish secondary higher bottom.

The short-term range is .7849 to .7532. Its retracement zone at .7691 to .7728 is potential resistance.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is the primary upside target.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD is likely to be determined by trader reaction to the pivot at .7598.

Bullish Scenario

Holding above .7598 will put the AUD/USD in a position to break out over the main top at .7664. This could start a labored rally with potential resistance targets coming in at .7691, .7728 and .7770.

Bearish Scenario

A failure to hold .7598 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling pressure to possibly extend into the main bottom at .7532.

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