AUD/USD Forex Technical Analysis – Trapped Inside Long-Term Retracement Zone at .7499 to .7379 on Low Volume

The Australian Dollar is edging lower early Monday on lackluster trading. With the U.S. on a bank holiday, many of the major players have moved to the sidelines. Investors are also likely squaring positions ahead of Tuesday’s Reserve Bank (RBA) Rate Statement and cash rate decision.

At 02:43 GMT, the AUD/USD is trading .7434, down 0.0016 or -0.21%.

In economic news, the MI Inflation Gauge came in at 0.0%, down from 0.5%. ANZ Job Advertisements slipped in August as coronavirus lockdowns spread from Sydney to Melbourne and Canberra, though the drop was minor compared to the losses seen during the first stage of the pandemic last year.

Monday’s figures from Australia and New Zealand Banking Group showed total job ads fell 2.5% in August from July, when they fell 1.3%.

Despite the intraday weakness, the near-term outlook is bullish as investors pushed back expectations for when the Federal Reserve will begin tapering its massive stimulus.

Meanwhile, the RBA is expected to reduce asset purchases again at Tuesday’s monetary policy meeting.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7478 will signal a resumption of the uptrend. A move through .7222 will change the main trend to down. Monday’s early inside move suggests investor indecision and impending volatility.

The long-term range is formed by the November 2, 2020 main bottom at .6991 and the February 25 main top at .8007. The AUD/USD is currently trading inside its retracement zone at .7499 to .7379. This zone is controlling the longer-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD is likely to be determined by trader reaction to .7450.

Bullish Scenario

A sustained move over .7450 will indicate the presence of buyers. Taking out last week’s high at .7478 should trigger a rally into the resistance cluster at .7499 to .7503.

Bearish Scenario

A sustained move under .7450 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling pressure to possible extend into the major Fibonacci level at .7379.