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James Hyerczyk
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AUD/USD

The Australian Dollar is trading lower early Wednesday as a sell-off in global shares dragged on higher-yielding currencies. Meanwhile, Aussie bonds underperformed as government borrowing plans disappointed bullish investors.

At 07:24 GMT, the AUD/USD is trading .7807, down 0.0033 or -0.42%.

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The Aussie is also being undermined in part by news China’s Dalian Commodity Exchange was proposing to reduce the standard iron content requirement in its flagship futures, seeking to broaden supply sources and stem a record-setting rally.

Additionally, on Tuesday the government released its 2021/22 budget that included more spending than expected, which should support economic growth but also lifted its borrowing needs.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top on Monday and its subsequent confirmation yesterday.

A trade through .7891 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend changes to down on a trade through .7675.

The main range is .8007 to .7532. The AUD/USD is currently testing its retracement zone at .7826 to .7769. This zone is controlling the near-term direction of the Forex pair.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is the primary downside target. A test of this area could bring in new buyers.

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Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the main Fibonacci level at .7826.

Bullish Scenario

A sustained move over .7826 will indicate the presence of buyers. The first upside target is a minor pivot at .7839. This is followed by .7891.

Bearish Scenario

A sustained move under .7826 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to extend into the main 50% level at .7769. Watch for a technical bounce on the first test of this level. If it fails, however, we could see an acceleration to the downside with the short-term 50% level at .7711 the next major target.

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