AUD/USD Forex Technical Analysis – August 4, 2017 Forecast

The AUD/USD is trading slightly higher after the release of the Reserve Bank of Australia Monetary Policy Statement early Friday and ahead of the U.S. Non-Farm Payrolls report later in the session. Volume and volatility are relatively light.

In its quarterly statement on monetary policy, the RBA slightly downgraded its growth forecasts for the Australian economy while predicting a bounce back over the next few years as inflation returns to normal levels.

The U.S. Non-Farm Employment Change is expected to show the economy added 182K jobs in July. The Unemployment Rate is expected to fall to 4.3% from 4.4%. Average Hourly Earnings are expected to rise 0.3%, up from 0.2%.

Average hourly earnings are a good indicator of inflation. If they come in lower than expected then this will be bearish for U.S. interest rates and the U.S. Dollar because it will reduce the chances for a Fed rate hike this year.

Technical Analysis

The main trend is up according to the daily swing chart. However, upside momentum has slowed since the formation of the closing price reversal top at .8065 on July 27.

A trade through .8065 will negate the closing price reversal top and signal a resumption of the uptrend. A trade through .7874 will change the main trend to down.

The market is facing stiff resistance from a series of retracement levels at .7970, .7990 and .8007.

Support is a 50% level at .7925 and a Fibonacci level at .7893.

The main range is .7571 to .8065. If the trend changes to down then its retracement zone at .7818 to .7760 will become the primary downside target.

Forecast

Based on the current price at .7069, the direction of the AUD/USD today will be determined by trader reaction to the 50% level at .7070.

A sustained move over .7070 is likely to trigger a labored rally into .7990, .8005 and .8007. These levels are followed by a downtrending angle at .8035, which is the last potential resistance angle before the .8065 main top.

If the market is headed lower, it needs to form a secondary lower top to indicate that sellers are stopping the market and that new shorts are entering. This is likely to occur on a test of the resistance levels.

A sustained move under .7069 will signal the presence of sellers. This could lead to a break into a downtrending angle at .7945 then the 50% level at .7925.

Additional downside targets come in at .7914, .7893 and .7874.

If .7874 fails then look for a test of the major retracement zone at .7818 to .7760 over the near-term. An uptrending angle passes through this zone today at .7791, making it a valid downside target also.

If the AUD/USD is getting ready to turn lower then look for the formation of a secondary lower top then a break through the main bottom. In other words, the Forex pair will form an “M” on the daily chart.