AUD/USD Forex Technical Analysis – Weekly Strength Over .7094, Weakness Under .7079

The Australian Dollar closed higher last week, but inside the previous week’s range. The chart pattern suggests investor indecision and impending volatility. The currency was supported by weaker-than-expected U.S. economic data which suggested the Fed is likely to remain cautious about future interest rate hikes. Optimism over a U.S.-China trade deal also helped underpin the Aussie as well as new stimulus from the Chinese government.

Last week, the AUD/USD settled at .7087, up 0.0041 or +0.58%.

This week’s price action is likely to be driven by Tuesday’s release of the minutes from the recent Reserve Bank of Australia monetary policy meeting and the Fed’s announcements on Wednesday.

The RBA minutes may reveal its outlook for future rate cuts. The market has priced in the first cut for August. The Fed is widely expected to leave rates unchanged and maintain its “patient” approach toward rate hikes. The Federal Open Market Committee’s economic projections could move the AUD/USD higher if they suggest the Fed will refrain from additional rate hikes later this year.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. A trade through .7296 will change the main trend to up. A move through .6764 will signal a resumption of the downtrend.

The minor trend, which controls the short-term momentum, is also down. A trade through .7003 will reaffirm the minor trend. A move through .7207 will change the minor trend to up. This will also shift momentum to the upside.

The main range is .7394 to .6764. Its retracement zone at .7079 to .7153 is controlling the longer-term direction of the AUD/USD. It is currently acting like resistance.

The minor range is .6764 to .7296. Its retracement zone at .7030 to .6967 is controlling the short-term direction of the AUD/USD. This zone is currently acting like support.

Weekly Technical Forecast

Based on last week’s price action and the close at .7087, the direction of the AUD/USD this week is likely to be determined by trader reaction to the main 50% level at .7079.

Bullish Scenario

A sustained move over .7079 will indicate the presence of buyers. The first target is a downtrending Gann angle at .7094. This angle is a potential trigger point for an acceleration to the upside with the next target a Fibonacci level at .7153.

Overtaking .7153 will indicate the buying is getting stronger. This could lead to a test of the uptrending Gann angle at .7202. Overtaking this angle should trigger a further rally into the downtrending Gann angle at .7244.

Bearish Scenario

A sustained move under .7079 will signal the presence of sellers. A failure to hold this level could trigger a quick break into the short-term 50% level at .7030. This level is a potential trigger point for an acceleration into a series of levels including the minor bottom at .7003, an uptrending Gann angle at .6984 and the short-term Fibonacci level at .6967.

Look out to the downside if .6967 fails as support since the next major target angle is way down at .6874.