The Australian Dollar is trading higher on Thursday in reaction to the relative calm in the financial prices. The currency remains inside a tight range that could be an indication of investor indecision and impending volatility. Keeping a lid on the Aussie has been this week’s weak set of economic data which might encourage the Reserve Bank of Australia (RBA) to commit to easing rates. Perhaps underpinning the currency is a steep plunge in U.S. Treasury yields.
The overall downtrend remains intact as investors continue to price in an RBA rate cut in August and perhaps another later in the year. Tensions over U.S.-China trade relations are also leaning on the Aussie with no end in sight to the trade dispute.
At 06:19 GMT, the AUD/USD is trading .6928, up 0.0012 or +0.17%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been drifting higher since the minor reversal to the upside on May 23. A trade through .6864 will reaffirm the downtrend. This could lead to an eventual test of the January 3 bottom at .6764.
The minor trend is up. This is controlling the momentum. A trade through .6939 will reaffirm this uptrend. A trade through .6904 will change the minor trend to down. This will also shift momentum to the downside.
The minor range is .6864 to .6939. Its 50% level or pivot at .6901 is controlling the short-term direction of the Forex pair.
The main resistance is the Fibonacci level at .6967. The short-covering is likely to get stronger on a move over this level, but don’t look for a change in trend.
Daily Technical Forecast
Based on yesterday’s price action and the current price at .6928, the direction of the AUD/USD on Thursday is likely to be determined by trader reaction to the pivot at .6901.
Holding above .6901 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the minor top at .6939. Taking out this level could trigger an acceleration to the upside with .6967 the next target.
The inability to overcome .6939 will indicate that sellers are defending this level. If this creates enough downside momentum then look for the selling to possibly extend into the pivot at .6901, followed by a price cluster at .6896 to .6895.
Look for a technical bounce on the first test of .6896 to .6895. Watch for a potential acceleration to the downside if .6895 fails as support. The first downside target is a pair of bottoms at .6864, followed by a long-term uptrending Gann angle at .6829.