AUD/USD Forex Technical Analysis – Weak US Retail Sales Could Spike Aussie into .7048 – .7099

The Australian Dollar is edging higher early Tuesday after Australia’s central bank signaled another rate hike was likely at its June policy meeting. The move also shows traders are shrugging off bearish economic news from China, indicating oversold conditions.

At 06:05 GMT, the AUD/USD is trading .7006, up 0.0037 or +0.53%. On Monday, the Invesco CurrencyShares Australian Dollar Trust settled at $68.98, up $0.35 or +0.51%.

RBA Minutes Give Aussie Surprise Boost

Besides the technical short-covering, the Aussie is getting help from minutes of the Reserve Bank of Australia’s (RBA) last policy meeting, which dropped a heavy hint that another rate rise was coming in June.

June financial futures dipped to fully price in a quarter-point hike to 0.60% on June 7, and have rates reaching 1.35% by August following inflation data for the second quarter.

Looking Ahead…

Aussie traders are now gearing up for Wednesday’s all important wage data figures, which will offer clues on the pace of wage inflation. Traders expect the data to show annual growth picking up to 2.5%. Additionally, jobs data for May on Thursday could show unemployment falling under 4.0% for the first time since the early 1970s.

In the U.S., traders are waiting for the release of April’s retail sales report and others including industrial production. Bearish retail sales numbers could weaken the case for an aggressive Fed. This news would put pressure on the U.S. Dollar, leading to more short-covering in the Australian Dollar.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6829 will signal a resumption of the downtrend. A move through .7266 will change the main trend to up.

The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift momentum to the upside.

The minor range is .7053 to .6829. Its pivot at .6941 is new support.

The short-term range is .7266 to .6829. Its retracement zone at .7048 to .7999 is the next upside target. This is followed by additional resistance at .7144 to .7218.

Daily Swing Chart Technical Forecast

Trader reaction to .6941 will likely determine the direction of the AUD/USD on Tuesday.

Bullish Scenario

A sustained move over .6941 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the resistance cluster at .7048 – .7053. Sellers could come in on the first test of this area, but if it fails, prices could spike into .7099.

Bearish Scenario

A sustained move under .6941 will signal the return of sellers. This could lead to a near-term test of the main bottom at .6829, followed by long-term bottoms at .6811 and .6777.