AUD/USD Forex Technical Analysis – March 3, 2017 Forecast

The AUD/USD is trading lower early Friday after a sharp sell-off yesterday. Thursday’s steep break was fueled by increasing expectations for a rate hike by the Federal Reserve later in the month.

The early selling pressure was likely fueled by a weaker-than-expected Australian Trade Balance report. However, the main driver of the price action was likely the hawkish talk from three key Fed officials on Wednesday.

Late Wednesday, one of the most dovish policymakers, Governor Lael Brainard, contributed to the selling pressure when she said, “We are closing in on full employment, inflation is moving gradually toward out target, foreign growth is on more solid footing, and risks on the outlook are as close to balanced as they have been in some time. Assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path.”

The CME Group’s FedWatch tool puts the probability of a rate hike this month at 75 percent, up from 66 percent the previous session.

On Friday, investors will be watching closely several Fed speakers including Loretta Mester, Jerome Powell, Charles Evans, Stanley Fischer and Janet Yellen. Fed Chair Janet Yellen will be particularly in focus.

Technical Analysis

The main trend is down according to the daily swing chart. If the downside momentum continues then look for the move to continue into the January 27 bottom at .7511.

The short-term range is .7511 to .7740. Its 50% level or pivot is .7625. This is resistance today.

The major range is .7777 to .7159. Its retracement zone is .7541 to .7468. The market is currently testing the Fibonacci level of this range at .7541.

This price is the trigger point for an acceleration into the main bottom at .7511. This is followed by a pair of 50% levels at .7468 and .7449.

Forecast

Based on the current price at .7555, the direction of the AUD/USD the rest of the day is likely to be determined by trader reaction to the major Fibonacci level at .7541.

Holding above .7541 could generate the upside momentum to challenge the downtrending angle at .7620. This is followed by the pivot at .7625 and another downtrending angle at .7680.

If .7541 is taken out with conviction then look for the AUD/USD to accelerate to the downside with the first target .7511. This is followed by .7468 and .7449.

The next major uptrending angle comes in at .7399, followed by a Fibonacci level at .7381.

Watch the price action and read the order flow at .7541 today. Trader reaction to this price will set the tone for the day. Fed speakers Fischer and Yellen could trigger a volatile move.