Forex AUD / USD Technical Analysis – Trader’s reaction at 0.7083 sets the tone; RBA on tap
The Australian dollar is trading flat shortly before the release of interest rates and the Reserve Bank’s (RBA) policy decisions at 03:30 GMT.
Traders do not expect any surprises from the central bank, with the 34 economists in the latest Reuters poll seeking to keep the cash rate at 0.10%. However, a small majority expect a rate hike in the first quarter of 2023.
At 02:51 GMT, the AUD / USD is trading at 0.7050, down 0.0001 or -0.02%. The Invesco CurrencyShares Australian Dollar Trust (FXA) ETF is trading at $ 69.94, up $ 0.41 or + 0.59%.
Despite new concerns about the Omicron coronavirus variant, a poll of Reuters economists is now calling on the RBA to raise rates in early 2023, and possibly sooner. The group advanced its rate hike expectations for the second consecutive month.
Amid rising inflation in Australia and around the world, the RBA is now expected to raise its key rate to a record low of 0.10% in the first quarter of 2023.
Technical analysis of the daily swing chart
The main trend is downward according to the daily swing chart. A trade up to the main floor on November 2, 2020 at 0.6991 will reaffirm the downtrend. This could trigger further weakness from the July 16, 2020 main floor at 0.6963 and the July 14, 2020 main floor at 0.6921.
A move through .7431 will change the main trend upward. This is unlikely, however, due to the prolonged decline in price and time, the market is ripe for a countertrend rally.
The minor trend is also downward. A trade through .7173 will change the minor trend upward. This will shift the momentum upward.
The minor range is 0.7173 to 0.6993. Its 50% or pivot level at .7083 is the first bullish target. The second bullish target is the pivot at 0.7182, followed by a short-term retracement area of 0.7212 to 0.7264.
Technical forecasts of the daily swing chart
The direction of the AUD / USD on Tuesday will likely be determined by the reaction of traders at .7046.
A sustained move above .7046 will indicate the presence of buyers. The first target on the upside is the pivot at 0.7083.
Removing .7083 will indicate that the buy is getting stronger. This could trigger an upward acceleration with .7173 – .7182 the next target.
A sustained move below .7046 will signal the presence of sellers. If that creates enough downside momentum, look for a retest of last week’s low at .6993, followed by a series of major lows at .6991, .6963 and .6921.