The Australian Dollar is nudging higher early Monday as traders began positioning themselves ahead of the August 26-28 central bankers’ symposium, where Federal Reserve Chairman Jerome Powell may or may not offer clues as to the central bank’s plans to begin tapering its emergency stimulus.
Since late Friday, we’ve seen short-covering and almost no signs of the extreme bearishness that hit the currency from Tuesday through early Friday. Nonetheless, no one is expecting any major gains over the near-term because of dovish comments from the Reserve Bank of Australia (RBA) last week and the current COVID-related lockdowns that should weaken the economy.
At 0:39 GMT, the AUD/USD is trading .7149, up 0.0009 or +0.13%.
In economic news, Australia’s Flash Manufacturing PMI and Flash Services PMI came in lower than previously reported at 51.7 and 43.3, respectively.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through .7106 will signal a resumption of the downtrend. A move through .7427 will change the main trend to up. This is highly unlikely, but there is room for a normal 50% to 61.8% retracement.
The minor trend is also down. A trade through .7389 will change the minor trend to up. This will also shift momentum to the upside.
The current minor range is .7389 to .7106. If the current counter-trend rally generates enough upside momentum then its retracement zone at .7248 to .7281 will become the primary upside target.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7140.
A sustained move over .7140 will indicate the presence of buyers. If this move creates enough upside momentum then we could see a near-term counter-trend rally into a former main bottom at .7222, followed by the retracement zone at .7248 to .7281.
A sustained move under .7140 will signal the presence of sellers. The first downside target is last week’s low at .7106. Taking out this level will indicate the selling pressure is getting stronger. The daily chart indicates there is plenty of room to the downside with the November 2 main bottom at .6991 the next likely target.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire