AUD/USD Forex Technical Analysis – Highlighted by Trader Indecision, Impending Volatility

AUD/USD is trading flat as we near the end of Thursday’s session. The market is also posting an inside move which suggests investor indecision and impending volatility. Traders may not be sure how to play the market at this time ahead of Friday’s U.S. consumer inflation data.

Traders are also getting mixed signals which can be confusing. Sellers are responding to the dumping of higher-yielding assets. Buyers are looking at falling U.S. Treasury yields and a widening interest rate differential.

Technically, the main trend is down. It turned down on Wednesday when sellers took out the last swing bottom at .7874. However, since it was already down nine days from the top, bearish trader had a hard time shorting weakness into the news.

If the selling continues then we’re likely to see a test of the major retracement zone at .7818 to .7760. We could see a technical bounce on the first test of this level.

The short-term range is .7786 to .8065. We could see the start of meaningful short-covering rally if buyers can overtake the short-term retracement zone at .7893 to .7926.

The next move in the Aussie is going to be determined by whether investors want to take advantage of a favorable interest rate differential because of falling Treasury yields and buy the Australian Dollar, or if they decide to sell the AUD and move their money into safe haven assets like gold or the Japanese Yen.