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James Hyerczyk

The Australian Dollar is holding steady early Monday as investors prepare for Wednesday’s U.S. Federal Reserve interest rate and monetary policy decisions and await a possible announcement about a partial trade deal between the United States and China.

The Fed is widely expected to cut its benchmark interest rate 25-basis points, but investors want to know about the frequency and timing of future rate cuts. Since the Reserve Bank of Australia cut on October 1, it is expected to leave its benchmark unchanged at its November meeting.

At 08:15 GMT, the AUD/USD is trading .6821, unchanged.

AUD/USD traders should also pay attention to U.S. Treasury yields since rising yields exerted the most pressure on the Aussie Dollar last week.


Daily 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 October 22 at .6883.

A trade through last week’s low at .6809 will indicate the selling pressure is getting stronger. A move through .6883 will negate the closing price reversal top and signal a resumption of the uptrend.

The main range is .6895 to .6671. Its retracement zone at .6809 to .6783 is potential support. The upper or Fibonacci level stopped the selling last week and is holding so far today.

The short-term range is .6671 to .6883. Its 50% level at .6804 is potential support.


Daily Technical Forecast

Based on the early price action, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the Fibonacci level at .6809.

Bullish Scenario

A sustained move over .6809 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the downtrending Gann angle at .6843.

Bearish Scenario

A failure to hold .6809 will signal the presence of sellers. This could lead to a test of a support cluster at .6804 to .6803. Since the trend is up, buyers could come in on a test of this area. This could then trigger a breakout over .6809.

However, we could see the start of a steep break if .6803 fails as support with the next target the main 50% level at .6783. Once again, look for a technical bounce. However, if .6783 fails then look for a possible extension of the selling into a pair of uptrending Gann angles at .6764 and .6761.

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