The Australian Dollar is grinding higher early Wednesday after posting it largest daily gain in a month the previous session. The rally was powered by the Minutes of the Reserve Bank of Australia’s (RBA) July policy meeting released early Tuesday which showed that the central bank sees a need for more policy tightening to curb inflation.
The Aussie is also being lifted by a weaker U.S. Dollar, which fell on reduced expectations of a supersized 100-basis-point rate hike at next week’s Federal Reserve policy review.
Hawkish comments from RBA Governor Philip Lowe earlier on Wednesday were also supportive. Lowe suggested that rates could at least double from current low levels.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through .6964 will change the main trend to up. A move through .6682 will signal a resumption of the downtrend.
The minor trend is up. It turned up on Monday, and the move was reaffirmed during yesterday’s session on the breakout over .6874. This is controlling the momentum.
The short-term range is .7069 to .6682. The AUD/USD is currently testing its retracement zone at .6875 to .6921.
The intermediate range is .7283 to .6682. If the main trend changes to up then its retracement zone at .6983 to .7053 will become the next upside target.
On the downside, minor support is a retracement zone at .6797 to .6770.
Daily Swing Chart Technical Forecast
Trader reaction to the short-term Fibonacci level at .6921 is likely to determine the direction of the AUD/USD early Wednesday.
A sustained move over .6921 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the main top at .6964, followed by the intermediate 50% level at .6983.
A sustained move under .6921 will signal the presence of sellers. This could trigger a break into the short-term 50% level at .6875. Buyers could defend this price on the first test. Taking out this level could trigger an acceleration to the downside with .6805 the next likely target.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire