AUD/USD Forex Technical Analysis – Tight Range as Major Players Take to Sidelines Ahead of US Elections


The Australian Dollar is inching lower early Tuesday following a second session of gains. The risk-sensitive currency is being supported by strength in the Chinese Yuan, as investors clung to hopes that China’s restrictive zero-tolerance approach to COVID-19 will eventually ease.

The Aussie rallied on Monday, but gains were likely capped ahead of U.S. Congressional election results on Tuesday and the major U.S. consumer inflation report on Thursday.

A 02:09 GMT, the AUD/USD is trading .6466, down 0.0015 or -0.22%. On Monday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $64.13, up $0.05 or +0.08%.

In economic news, the AIG Services Index came in weaker-than-expected at 47.7 versus a 48.0 forecast. The reading indicates the sector is still in contraction.

Additionally, a measure of Australian consumer sentiment sank in November as rising interest rates and surging inflation clouded the outlook for family finances and the economy, though actual spending has yet to follow.

Finally, business activity in Australia remained strong last month but confidence weakened as firms grew wary of the potential for a slower period ahead, a long-running business survey indicated.

Later today, investors will get the opportunity to react to a speech by Reserve Bank of Australia Governor Philip Lowe at 09:30 GMT.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6492 will change the main trend to up. A move through .6272 will signal a resumption of the downtrend.

The AUD/USD is currently trading on the strong side of a long-term Fibonacci level at .6466, making it support. Additional support is a pair of 50% levels at .6397 and .6346.

On the upside, the nearest resistance is a 50% level at .6543, followed by a Fibonacci level at .6543.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term Fibonacci level at .6466 is likely to determine the direction of the AUD/USD on Tuesday.

Bullish Scenario

A sustained move over .6466 will indicate the presence of buyers. Taking out this level could trigger a quick surge into the main top at .6492, followed by another main top at .6522 and a resistance cluster at .6543 to .6548.

Bearish Scenario

A sustained move under .6465 will signal the presence of sellers. This could trigger a break into the pivot at .6397.

Buyers could come in on the first test of .6397, but if it fails then look for the selling to possibly extend into the next 50% level at .6346.


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