AUD/USD Forex Technical Analysis – Trader Reaction to .7739 Pivot Sets the Tone

The Australian Dollar is edging lower early Wednesday after posting a two-sided trade following the release of a report showing higher than expected quarterly consumer inflation. Nervousness ahead of the U.S. Federal Reserve’s monetary policy announcements at 19:00 GMT could also be contributing to the choppy price action.

At 07:52 GMT, the AUD/USD is trading .7774, down 0.0010 or -0.13%. This is down from an earlier high at .7764.

According to the Australian Bureau of Statistics, Australia’s consumer prices rose faster than forecast in the final three months of last year as the government amended funding to various stimulus programs amid an economy regaining momentum.

The consumer price index advanced 0.9% from the third quarter, underpinned by increases in tobacco excise, compared with economists’ estimates of a 0.7% gain. Annual CPI also beat forecasts, similarly rising by 0.9% versus an estimated 0.7%.

The quarterly trimmed-mean gauge of inflation matched estimates, rising 0.4%, and slightly exceeded them on an annual basis, advancing 1.2% versus a forecast of 1.1%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, the Forex pair is struggling to sustain that downtrend. A trade through .7669 will signal a resumption of the downtrend. A move through .7782 will change the main trend to up.

The minor range is .7820 to .7659. The AUD/USD is currently straddling its 50% level at .7740.

The short-term 50% target is .7579.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD on Wednesday will be determined by trader reaction to the pivot at .7740.

Bullish Scenario

A sustained move over .7740 will indicate the presence of buyers. Taking out the intraday high at .7764 will indicate the buying is getting stronger. This could trigger a rally into the main top at .7782.

Taking out .7782 will change the main trend to up. This could trigger a further rally into a pair of main tops at .7805 and .7820.

Bearish Scenario

A sustained move under .7739 will signal the presence of sellers. If this move can create enough downside momentum then look for the selling to possibly extend into the three main bottoms lined up at .7669, .7659 and .7643. A failure to hold .7643 could trigger a further break into the 50% level at .7579.