AUD/USD Trading on Strong Side of Retracement Zone Support
The Australian Dollar is edging higher on Wednesday as traders position themselves ahead of the Fed’s policy announcements at 19:00 GMT.
Market players are anxiously awaiting further clues on the timing and pace of interest rate hikes, as well as how the central bank will go about slimming down its almost $9 trillion balance sheet, a process dubbed quantitative tightening (QT).
The Reserve Bank of Australia meets next week, and traders are anxious to see if blowout inflation numbers released Tuesday force Governor Philip Lowe to backtrack on his previous insistence that rate hikes this year are extremely unlikely.
At 10:43 GMT, the AUD/USD is trading .7174, up 0.0023 or +0.32%. On Tuesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $70.85, unchanged.
In other news, the risk-sensitive Australian Dollar could be getting a lift from a rise in global equity markets after short-term selling pressure subsided.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .7091 will signal a resumption of the downtrend. A move through .7277 will change the main trend to up.
The short-term range is .6993 to .7314. The AUD/USD is currently trading on the strong side of its retracement zone at .7153 to .7116, making it support.
On the upside, the nearest resistance is a pair of 50% levels at .7184 and .7221.
The main range is .7556 to .6993. Its retracement zone at .7275 to .7341 is resistance. This area stopped the selling on January 13 at .7314.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Wednesday will be determined by trader reaction to .7140.
A sustained move over .7140 will indicate the presence of buyers. Overtaking .7154 will indicate the buying is getting stronger with the next targets .7184 and .7221.
The pivot at .7221 is a potential trigger point for an acceleration to the upside with the first target a resistance cluster at .7275 – .7277. This area is followed by .7314 and .7341.
A sustained move under .7140 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into .7116, followed by .7091 and .7083. The latter is a potential trigger point for an acceleration to the downside. The major downside target is a support cluster at .6993 – .6991.