The Aussie has given up all of the gains made after the RBA raised interest rates to a 10-year high on Monday and warned of more hikes to follow.
The Australian Dollar is trading flat for a second session on Wednesday despite weaker-than-expected quarterly GDP data and trade balance data from China that came in weaker-than-the-precious month but better than the forecast
The Aussie is currently testing a one-week low and gains are being capped after warnings of an impending recession from top U.S. bankers. The news helped enhance the greenback’s safe-haven appeal. Traders are also on edge ahead of next week’s Federal Reserve interest rate announcement.
At 05:36 GMT, the AUDUSD is trading .6711, up 0.0023 or +0.34%. On Tuesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA).
Australian Dollar traders seem to have moved to the sidelines ahead of next week’s Fed moves. The Aussie has given up all of the gains made after the Reserve Bank of Australia (RBA) raised interest rates to a 10-year high on Monday and warned that more hikes would be needed to tame inflation. Traders also showed little reaction to the slight miss on Australia’s third quarter gross domestic product data.
The main trend is up according to the daily swing chart. However, momentum is trending lower following the Dec. 5 closing price reversal top.
A trade through .6851 will signal a resumption of the uptrend. A move through .6641 will change the main trend to down.
The AUDUSD is currently trading inside a minor retracement zone at .6718 to .6687.
The nearest resistance is a long-term 50% level at .6760. The nearest support is a retracement zone at .6618 – .6563.
Trader reaction to .6718 and .6686 is likely to determine the direction of the AUD/USD on Wednesday.
A sustained move over .6718 will indicate the presence of buyers. This could trigger a surge into .6760. Overtaking this level will put .6851 in play.
A sustained move under .6686 will signal the presence of sellers. This could trigger an acceleration into the main bottom at .6641.
The trend will change to down if sellers take out .6641. This could lead to a test of .6618 – .6563.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.