The Australian Dollar is edging higher against the U.S. Dollar on Monday after Reserve Bank of Australia (RBA) Governor Philip Lowe made a slightly hawkish comment by saying that accommodative monetary policy would not work if everyone is easing, offsetting the positive effect of weaker exchange rates.
Lowe made his comment early Monday at a time when the financial markets are pricing in a 50 basis point rate cut before the year-end. The RBA cut its benchmark rate by 25 basis points to a record low of 1.25% earlier this month.
At 07:00 GMT, the AUD/USD is trading .6951, up 0.0025 or +0.36%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on June 18 at .6832.
A trade through .7022 will change the main trend to up. A move through .6832 will signal a resumption of the downtrend.
The minor range is .7022 to .6832. Its retracement zone at .6927 to .6949 is controlling the short-term direction of the AUD/USD. Holding about this support zone will help generate an upside bias.
The main range is .7206 to .6832. Its retracement zone at .7019 to .7063 is the next major upside target area.
Daily Technical Forecast
Based on the early price action and the current price at .6951, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the short-term Fibonacci level at .6949.
A sustained move over .6949 will indicate the presence of buyers. This could drive the AUD/USD into a major downtrending Gann angle at .6966. This angle has been controlling the direction of the Forex pair since April 17. It stopped a rally on June 7 at .7022.
Look for sellers on the first test of .6966 since the main trend is down. However, if aggressive counter-trend buyers can take out this angle then look for an acceleration to the upside with the near-term targets the 50% level at .7019 and the main top at .7022.
A sustained move under .6949 will signal the presence of sellers. It may also be an indication that the knee-jerk reaction to Lowe’s unexpected comments is over. This could trigger a break back to the 50% level at .6927, followed by a support cluster at .6912.
Buyers could come in on a test of .6912, but if it fails then look for an acceleration to the downside with the next target angle .6872.
This article was originally posted on FX Empire
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