AUD/USD May Have Enough Momentum to Reach .7262 – .7331

The Australian Dollar is moving higher on Wednesday after confirming yesterday’s closing price reversal bottom. The catalyst generating increased demand for riskier assets is the news that Russian Foreign Minister Sergei Lavrov said peace talks with Ukraine were not easy but there was hope for compromise.

According to reports from Reuters, Lavrov said that some deals with Ukraine were close to being agreed, with neutral status for Kyiv under “serious” consideration. Meanwhile, Ukrainian President Volodymyr Zelensky added peace talks were sounding more realistic but more time was needed.

At 10:09 GMT, the AUD/USD is trading .7229, up 0.0034 or +0.48%. On Tuesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $71.42, up $0.03 or +0.04%.

After hitting a new low for the month on Tuesday, the AUD/USD rebounded on a report from China’s Xinhua news agency that cited Vice Premier Liu He saying the country will roll out policy steps favorable for its capital markets.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through .7086 will change the main trend to down. A move through .7441 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through .7368 will change the minor trend to up, while a move through the new minor bottom at .7165 will indicate the selling pressure is getting stronger.

Earlier today, Tuesday’s closing price reversal bottom was confirmed. This shifted momentum to the upside which look trigger the start of at least a 2-3 day rally.

The short-term range is .6967 to .7441. On Tuesday, the AUD/USD successfully tested its retracement zone at .7173 to .7125. This area remains support.

The main retracement zone resistance is .7262 to .7331.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Wednesday is likely to be determined by trader reaction to the short-term 50% level at .7173.

Bullish Scenario

A sustained move over .7174 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a surge into the main 50% level at .7262.

Sellers could come in on the first test of .7262, but overcoming this area could trigger an acceleration into the main Fibonacci level at .7331 over the short-run.

Bearish Scenario

A sustained move under .7173 will signal the return of sellers. Taking out the minor bottom at .7165 will indicate the selling pressure is getting stronger. This could trigger a further break into the short-term Fibonacci level at .7125.