AUD/USD Forex Technical Analysis – Trading on Strong Side of Pivot at .7090 Ahead of Fed Announcements

The Australian Dollar is edging higher against the U.S. Dollar early Wednesday as investors positioned themselves ahead of today’s Federal Reserve monetary policy announcements, due to be released at 19:00 GMT. The price action suggests a cautious tone with investors backing away from placing large bets ahead of the outcome of the two-day meeting.

At 08:33 GMT, the AUD/USD is trading .7128, up 0.0021 or +0.30%. On Tuesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $70.49, down $0.25 or -0.35%.

Ahead of the central bank decisions, traders already assume the Fed will signal an end to asset buying by March or April, and open the door to at least two rate hikes in 2022.

The early rebound by the Aussie suggests traders may have some doubts the Fed would live up to hawkish expectations, or sound just dovish enough to encourage weak speculative shorts to cover positions.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher.

A trade through .7187 will change the main trend to up. A move through .6993 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum.

The minor range is .6993 to .7187. The AUD/USD is currently trading on the strong side of its pivot at .7090, making it new support.

The first two upside targets are a pair of 50% levels at .7182 and .7212. Overcoming .7212 will indicate the buying is getting stronger with .7275 to .7341 the next likely upside target.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to .7090.

Bullish Scenario

A sustained move over .7090 will indicate the presence of buyers. The first upside target is a minor pivot at .7139. Overcoming this level will indicate the buying is getting stronger. This could trigger a surge into a resistance cluster at .7182 – .7187, followed by another pivot at .7212.

The 50% level at .7212 is a potential trigger point for an acceleration into the short-term retracement zone at .7246 to .7341.

Bearish Scenario

A sustained move under .7090 will signal the presence of sellers. The daily chart indicates this move could trigger an acceleration to the downside with the next major target a pair of main bottoms at .6993 and .6991.