The Australian Dollar is trading nearly flat on Monday. However, the currency has successfully rebounded from early session weakness. Despite worries over a potential U.S. recession, the Aussie is trading relatively tame. Additionally, the lack of progress over U.S.-China trade relations could also be capping gains.
Aussie traders are also raising concerns over the drop in Australian bond yields to the lowest level on record. Earlier today, the benchmark 10-year government bond yield it 1.769 percent, nearly 50 basis points below the high of 2.21% struck earlier this month.
Traders are saying the continued decline in yields reflects a number of factors, including expectations for Australian economic growth and inflation in the years ahead, the outlook for the global economy, along with monetary policy settings from the RBA and other major central banks.
At 05:40 GMT, the AUD/USD is trading .7081, down 0.0001 or 0.01%.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on March 21 at .7168.
A trade though .7041 will change the main trend to down, while a move through .7168 will signal a resumption of the uptrend.
The minor trend is also up. A trade through .7057 will change the minor trend to down. This will reaffirm the shift in momentum.
On the downside, the major retracement zone support is .7030 to .6967. On the upside, the major retracement zone resistance is .7079 to .7153.
The main range is .7207 to .7003. Its retracement zone at .7105 to .7129 is the primary upside target. If the trend is getting ready to turn down then sellers should come in on a test of this zone.
Daily Technical Forecast
Based on the early price action, the direction of the AUD/USD on Monday is likely to be determined by trader reaction to the 50% level at .7079.
A sustained move over .7079 will indicate the presence of buyers. This should lead to a quick test of the steep downtrending Gann angle at .7088. Taking out this level could trigger an acceleration to the upside with .7105 the next likely upside target. Look for sellers on the first test of this level.
A sustained move under .7079 will signal the presence of sellers. If this move can generate enough downside momentum then look for a break into an uptrending Gann angle at .7058 and the minor bottom at .7057. Since the main trend is up, look for buyers on the first test of .7058 to .7057.
If .7047 fails then look for the selling to extend into the long-term uptrending Gann angle at .7049, followed by the main bottom at .7041.
This article was originally posted on FX Empire
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