AUD/USD Forex Technical Analysis – August 11, 2015 Forecast

The AUD/USD plunged early Tuesday after China’s government devalued its currency against the greenback by a record amount. The People’s Bank of China announces the mid-point against the U.S. Dollar for the day’s trading session each morning. Despite the weakening economy, the rate has remained remarkably stable since March, but today’s record 1.9 percent downward revision set off a flight to safety.

Technically, the main trend is down according to the daily swing chart. The main range is .7737 to .7233. Its retracement zone offers potential resistance at .7485 to .7544. The short-term range is .7495 to .7233. Its retracement zone at .7364 to .7395 is new resistance along with an uptrending angle at .7373 and a pair of downtrending angles at .7447 and .7468.

On the downside, the first target is an uptrending angle at .7303. This is followed by another angle at .7268. This is the last potential support before the .7233 main bottom.

If China continues to tinker with its currency then pressure could be on the Aussie all week. A trade through .7233 will reaffirm the downtrend with the next likely target a downtrending angle at .7157.

This week could be quite volatile for the AUD/USD with the possibility of two-sided trading at times. Monday, Fed member Lockhart said the economy is strong enough to begin hiking rates in September. Fed member Fischer, however, said a rate hike is not likely because inflation remains too far below the Fed’s 2% target.

The two Fed members essentially cancel each other out, therefore making any events dealing with China’s devaluation more important volatility drivers.