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AUD/USD Testing Major Support Zone at .7153 – .7116

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The Australian Dollar is inching lower on Monday as investors awaited a key reading of domestic inflation, which could impact interest rates. Cautious traders are also keeping an eye on global equity markets amid a sell-off in riskier assets. Meanwhile, volume is a little on the light side ahead of Wednesday’s major Federal Reserve policy announcements.

At 09:34 GMT, the AUD/USD is trading .7159, down 0.0017 or -0.23%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF settled at $71.22, down $0.42 or -0.58%.

Domestically, consumer price figures on Tuesday could set the stage for the Reserve Bank of Australia (RBA) to end its bond buying in February and reinforce market wagers for a hike as soon as May or June.

Median forecasts are for the CPI to rise 3.2% on the year in the December quarter, while core inflation is seen picking up to its fastest since 2014 at 2.4%.

Daily AUD/USD
Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trade through .7170 earlier today changed the main trend to down. A move through .7277 will change the main trend to up.

The short-term range is .6993 to .7314. The AUD/USD is currently testing its retracement zone at .7153 to .7116.

The main range is .7556 to .6993. Its retracement zone at .7275 to .7341 is resistance. This area stopped the selling at .7314 on January 13 and at .7277 on January 20.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7153.

Bearish Scenario

A sustained move under .7153 will indicate the presence of sellers. Taking out .7130 will reaffirm the downtrend, leading to a test of .7116.

A trade through .7116 could trigger the start of a steep sell-off. The first target is another main bottom at .7083. If this fails then look for an acceleration into the support cluster at .6993 – .6991.

Bullish Scenario

A sustained move over .7154 will signal the presence of buyers. Since the main trend is down, this could trigger the start of a short-covering rally.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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