AUDUSD Forecast – Prices Jump Ahead of Wednesday’s Key Consumer Inflation Report

The Australian Dollar is edging higher against the U.S. Dollar on Monday with buyers are taking advantage of thin trading conditions due to the celebration of the Chinese New Year.

Traders are also betting on a relatively smaller rate hike at next week’s Federal Reserve policy meeting. Traders are also looking forward to a domestic consumer inflation report on Wednesday that is expected to show inflation peaking.

At 04:34 GMT, the AUDUSD is trading .6976, up 0.0008 or +0.11%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $68.39, down $0.07 or -0.11%.

Wednesday’s consumer inflation data is expected to show prices in Australia accelerated to 7.5% from the previous 7.3%, although that is still below the forecast from the Reserve Bank of Australia for a peak of around 8%.

Markets still lean towards a quarter-point hike from the Reserve Bank of Australia next month, but talks of a pause are on the rise after softer jobs data last week.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through .7064 will signal a resumption of the uptrend. A move through .6688 will change the main trend to down.

The minor trend is down. This is controlling the momentum.

The minor range is .7064 to .6872. The AUDUSD is currently trading on the strong side of its pivot at .6968, making it support. Additional support is a price cluster at .6876 – .6872.

The major upside target is the August 11, 2022 main top at .7137.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at .6968 is likely to determine the direction of the AUDUSD on Monday.

Bullish Scenario

A sustained move over .6968 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a near-term rally into the minor top at .7064.

Bearish Scenario

A sustained move under .6968 will signal the presence of sellers. If this creates enough downside momentum then look for the start of a break into the support cluster at .6876 – .6872.