AUD/USD Forex Technical Analysis – July 12, 2017 Forecast

The AUD/USD is trading higher shortly before the U.S. opening and the start of Fed Chair Janet Yellen’s two day testimony before Congress. I expect Yellen to reiterate the Fed’s message from its latest monetary policy statement and minutes.

Therefore, she is likely to say that the economy is growing slowly and steadily and that inflation is muted, but that this is only temporary. She’ll probably say that inflation will pick up when employers start to pay higher wages. She may be asked about the timing of the next Fed rate hike and when the central bank will begin trimming its balance sheet. Any sooner than December should be good for the U.S. Dollar.

Earlier today, the Aussie received a boost from a better-than-expected Consumer Sentiment report. It came in at 0.4%, up from the previous -1.8%.

Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7712 will signal a resumption of the uptrend.

A new bottom has formed at .7571. A trade through this bottom will change the main trend to down.

The short-term range is .7712 to .7571. Its retracement zone is .7641 to .7658. The market is currently straddling this zone. Trader reaction to this zone is likely to determine the near-term direction of the market.

Buyers are trying to drive the market through this zone in an effort to solidify the importance of .7571. Aggressive, counter-trend sellers are going to try to stop the rally in an effort to form a potentially bearish secondary lower top.

The main range is .7372 to .7712. Its retracement zone at .7542 to .7502 is the primary downside target.

Forecast

Based on the current price at .7646, look for the rally to continue on a sustained move over .7658. A break back under .7641 will indicate the presence of sellers.

A sustained move over .7658 could lead to a quick test of the downtrending angle at .7672. Taking out this angle will indicate the buying is getting stronger. This could trigger an acceleration into the next downtrending angle at .7692. This is the last potential resistance angle before the .7712 main top.

A sustained move under .7641 will signal the presence of sellers. The first uptrending angle target is .7621. If this this angle fails to hold then look for the selling to continue into the next uptrending angle at .7596. This is the last potential support angle before the .7571 main bottom.

The AUD/USD is currently camping out inside a retracement zone. If Yellen is dovish then look for buyers to take out .7658. If Yellen is hawkish then .7641 should fail as support.