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The Australian Dollar is trading higher early Wednesday as the U.S. Dollar weakened amid an overnight downtick in U.S. Treasury yields. The currency is also being supported by positive news from the International Monetary Fund (IMF).
On Tuesday, the IMF warned about a global economic slowdown coupled with high inflation, but lifted the outlook for Australia from 4.1% to $4.2%.
At 04:26 GMT, the AUD/USD is trading .7413, up 0.0037 or +0.50%. On Tuesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $73.16, up $0.32 or +0.44%.
Elsewhere, China surprisingly kept its benchmark lending rates for corporates and households steady on Wednesday, going against the global trend of monetary tightening as major economies battle inflation. China is Australia’s largest trading partner.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .7343 will signal a resumption of the downtrend. A move through .7661 will change the main trend to up.
The minor trend is also down. A trade through .7494 will change the minor trend to up. This will also shift momentum to the upside.
The short-term range is .7165 to .7661. The AUD/USD is currently trading inside its retracement zone at .7413 to .7354. This zone is controlling the near-term direction of the Forex pair.
The long-term retracement zone at .7429 to .7538 is resistance. Inside this zone is minor pivot resistance at .7502.
A combination of the short-term and long-term retracement zones form a resistance cluster at .7413 to .7429.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Wednesday will be determined by trader reaction to a pair of 50% levels at .7413 and .7429.
Bearish Scenario
A sustained move under .7413 will indicate the presence of sellers. If this move creates enough downside momentum then look for a possible retest of the short-term Fibonacci level at .7354, followed by the minor bottom at .7343. This price is a potential trigger point for an acceleration to the downside with .7165 the next major target price.
Bullish Scenario
A sustained move over .7429 will signal the presence of buyers. This is a potential trigger point for an acceleration to the upside with the next target the minor top at .7494, followed by the minor pivot at .7502. Since the main trend is down, sellers could come in on the first test of this area.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire