AUD/USD Forex Technical Analysis – Bullish Reaction to Fed Meeting Minutes

The AUD/USD is trading higher early Thursday in response to the Federal Reserve’s decision to dial down on some of the more hawkish policy expectations in the market, according to the minutes from its May 3 meeting.

According to Fed policymakers, they agreed they should hold off on raising rates in May until they see evidence that a recent economic slowdown was transitory. Since then, however, most traders agree that the central bank is likely to raise rates at its meeting in June.

The U.S. Dollar was pressured on Wednesday against the Australian Dollar because of lower Treasury yields. They fell on the Fed’s signal of a gradual approach to raising rates.

Some traders say the reaction by the U.S. Dollar suggests that a rate hike in June is not a done deal. This is an indication that the dollar will become increasing sensitive to economic reports especially the U.S. Non-Farm Payrolls report and any reports on inflation. Traders are also likely to continue to keep their eye on any irregular Trump-related news headlines in the meantime.

Technical Analysis

The main trend is down according to the daily swing chart, but momentum is trending higher. If the upside momentum continues then traders will go after the May 2 top at .7556. Taking out this top will change the main trend to up with the next target the April 17 top at .7610.

On the downside, the support is layered at .7469, .7454 and .7442.

Forecast

Based on the current price at .7506 and the earlier price action, the direction of the AUD/USD the rest of the session is going to be determined by trader reaction to a pair of Gann angles at .7514. They stopped the rally earlier in the session.

A sustained move over .7514 will indicate the presence of buyers. This could trigger an acceleration to the upside with the next potential targets coming in at .7556 and .7610.

The inability to overcome .7514 will signal that investors are still defending the downtrend. The daily chart is open to the downside if the selling pressure increases with potential targets coming in at .7469, .7454 .7449 and .7442.

Watch the price action and read the order flow at .7514 all session. Trader reaction to this area will set the tone for the day.