AUD/USD Forex Technical Analysis – Major Weekly Retracement Zone Resistance .7079 to .7153

The Australian Dollar settled lower last week as investors priced in a potential rate cut by the Reserve Bank of Australia as early as May. The major event for the week was the release of the quarterly Consumer Price Index report and the quarterly Trimmed Mean CPI report.

Australian’s headline inflation rate came in flat for the March quarter against expectations of a 0.2 percent increase. The annual rate of 1.3 percent was the weakest since the third quarter of 2016.

After the release of the reports, financial market traders moved from pricing in about a 20 percent chance of the Reserve Bank of Australia cutting interest rates in May to about a 60 percent chance.

Last week, the AUD/USD settled at .7039, down 0.0113 or -1.57%.

This week, the price action is likely to be driven by the Fed’s interest rate decision and monetary policy statement on Wednesday. There could also be a reaction to the New Zealand jobs report.

Weekly Technical Analysis

The main trend is down according to the weekly swing chart. It was reaffirmed last week when sellers took out the early March main bottom at .7003. A trade through .7206 will change the main trend to up.

The main range is .7394 to .6764. Its retracement zone at .7079 to .7153 is still controlling the longer-term direction of the AUD/USD. It is now resistance.

The short-term range is .6764 to .7296. Its retracement zone at .7030 to .6967 is near-term support. It stopped the selling in early March at .7003 and last week at .6988.

Weekly Technical Forecast

Based on last week’s price action and close at .7039, the direction of the AUD/USD this week is likely to be determined by trader reaction to the short-term 50% level at .7030.

Bullish Scenario

A sustained move over .7030 will indicate the presence of buyers. If this creates enough upside momentum then look for the move to extend into the main 50% level at .7079. This could trigger a further rally into an uptrending Gann angle at .7104. Overtaking this angle will indicate the buying is getting stronger with the next upside targets the main Fibonacci level at .7153 and a downtrending Gann angle at .7184.

Bearish Scenario

A sustained move under .7030 will signal the presence of sellers. This is the trigger point for a potential break into a support cluster at .6974 to .6967. If this area fails then look for the selling to extend into the uptrending Gann angle at .6934.

The Gann angle at .6934 is another trigger point for an acceleration into the next uptrending Gann angle at .6849. This is the last potential support angle before the .6764 main bottom.