AUD/USD Forex Technical Analysis – August 9, 2017 Forecast

The AUD/USD is trading lower shortly before the U.S. opening. The Forex pair is under pressure because of a disappointing Westpac Consumer Sentiment report which showed a negative 1.2% reading. Additionally, traders are also reacting to China’s Consumer Inflation data which came in at 1.4%, slightly below the 1.5% estimate.

The main story today is likely to be the tension between the United States and North Korea. The Australian Dollar is considered a higher-yielding asset. Escalating tensions between the two nations may lead to further weakness in the Aussie because at a time of crisis, investors tend to sell higher-yielding assets and move their money into lower-yielding assets like U.S. Treasury Bonds, Gold and the Japanese Yen.

So even though Treasury yields are lower today, this is not encouraging investors to buy the Australian Dollar. If the U.S. Dollar was trading lower because of economic reasons then the Aussie would likely firm. But in today’s market, the Aussie is under pressure due to the selling of higher risk assets and the subsequent buying of lower-risk assets.

Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier in the session when the AUD/USD took out its last swing bottom at .7874. Traders have to be careful selling weakness, however, because the market is down nine days from its recent top.

The short-term range is .7786 to .8065. Its retracement zone is .7893 to .7925. This zone is resistance. Overcoming this area could shift momentum to the upside.

The main range is .7571 to .8065. Its retracement zone is .7818 to .7760. This zone is the primary downside target.

Forecast

Based on the current price at .7899 and the earlier price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the Fib level at .7893 and the downtrending angle at .7885.

A sustained move under .7893 will signal the presence of buyers. This could trigger a move into the 50% level at .7925. This is another trigger point for a rally into the downtrending angle at .7975.

Crossing to the weak side of the downtrending angle at .7885 will signal the presence of sellers. If the volume increases on the move, we could see a plunge into the support cluster at .7821 to .7818.

Taking out .7818 with conviction could lead to further weakness with the major Fib at .7760 the next target level.

We could see a volatile two-sided trade today because some investors will buy the Aussie because of falling U.S. Treasury yields and some will sell the Aussie if investors continue to shed risky assets like stocks.