The Australian Dollar is trading lower on Tuesday after giving back its earlier gains. The currency traded higher shortly after the opening on expectations of a Fed rate cut in late July, but sellers came in to stop the rally because of increasing chances of a rate cut by the Reserve Bank of Australia on July 2.
At 06:48 GMT, the AUD/USD is trading .6956, down 0.0007 or -0.11%.
The RBA is expected to cut its benchmark rate to 1.00 percent, but the Aussie may not fall much further given yesterday’s comments by RBA Governor Philip Lowe. With the Fed also expected to cut rates, Lowe feels another cut will be counter-productive.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the closing price reversal bottom at .6832 on June 18. A trade through .7022 will change the main trend to up. A move through .6832 will signal a resumption of the downtrend.
The short-term range is .7022 to .6832. Holding above its retracement zone at .6949 to .6927 will continue to give the AUD/USD its upside bias. If it fails then short-term sentiment will shift to the downside.
The main range is .7206 to .6832. If the trend changes to up then its retracement zone at .7019 to .7063 will become the next upside target.
Daily Technical Forecast
Based on the early price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at .6961.
A sustained move over .6961 will indicate the presence of buyers. The next upside target is the downtrending Gann angle at .6992.
Overtaking .6992 could trigger a surge into .7019 to .7022. Taking out .7022 will change the main trend to up. This could trigger an acceleration to the upside with .7063 the next target.
A sustained move under .6961 will signal the presence of sellers. This could create a labored break with potential downside targets coming in at .6949, .6932 and .6927.
The daily chart will open up to the downside under .6927 with the next target angle coming in at .6862.
Even with the Fed cutting rates in late July, Aussie traders have to deal with the fact that the RBA will be cutting rates in early July and they have to adjust their positions to account for the timing difference. Furthermore, any bearish news about U.S.-China trade relations could put further pressure on the currency.
This article was originally posted on FX Empire
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