AUD/USD Forex Technical Analysis – July 10, 2017 Forecast

The AUD/USD closed higher on Friday as investors decided the strong AIG Construction Index outweighed the robust U.S. Non-Farm Payrolls report. The move also suggests the Forex pair may be short-term oversold, or that investors had fully-priced in a bullish jobs report and rising U.S. Treasury yields.

Early Monday, Australian Dollar investors will get the opportunity to react to the latest Consumer and Producer Inflation data from China. The CPI is expected to come in slightly higher at 1.6% and the PPI is expected to come in unchanged at 5.5%.

U.S. reports include the Labor Market Conditions Index and Consumer Credit, which is forecast at 12.1 billion, up from 8.2 billion.

Recently, the Reserve Bank of Australia maintained its neutral stance even as other central banks ramped up the hawkish rhetoric. However, Australian interest-rate futures markets suggest that while investors firmly believe that the record low, 1.5% Official Cash Rate will rise, it will not do so until the second half of 2018, at the earliest.

This suggests that the AUD/USD should continue to be pressured, or gains will continue to be capped by rising U.S. Treasury yields.

Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since June 30. A trade through .7712 will change the main trend to up.

A trade through .7571 will signal a resumption of the downtrend. This could lead to a test of the minor bottom at .7535. A trade through this level will change the minor trend to down.

The main range is .7372 to .7712. Its retracement zone at .7542 to .7502 is the primary downside target. Since the main trend is up, buyers could show up on a test of this zone.

The short-term range is .7712 to .7571. Its retracement zone at .7642 to .7658 is the primary upside target. Aggressive counter-trend sellers may come in on a test of this zone in an effort to form a secondary lower top.

Forecast

Based on Friday’s close at .7600 and the earlier price action, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the downtrending angle at .7592.

A sustained move over .7592 will indicate the presence of buyers. This could lead to a labored rally with potential upside targets layered at .7632, .7642, .7632 and .7658.

A sustained move under .7592 will signal the presence of sellers. The daily chart is open to the downside with the first target .7571, followed by .7542 and .7535.

Watch the angle at .7592 all session, trader reaction to this angle will tell us if buyers are coming in to support the market, or if the selling pressure is increasing.