AUDUSD Forecast – Position-Squaring Ahead of RBA Minutes Driving Prices Higher

The Australian Dollar is rebounding early Monday from last week’s steep sell-off. Buyers may be coming in due to the thin trading conditions amid a bank holiday in the United States.

Traders could also be covering shorts head of Wednesday Federal Reserve minutes and Friday’s Personal Consumption Expenditures (PCE) report. The report is expected to show a rise of 1.3% in January, more than recovering from weakness in the prior two months.

The Fed’s favorite inflation indicator, the core PCE index, is seen rising 0.4%, the biggest gain in five months, while the annual pace may have slowed just a fraction to 4.3%.

At 06:48 GMT, the AUDUSD is trading .6890, up 0.0011 or +0.17%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $68.27, up $0.20 or +0.29%.

Domestically, volatility could return on Tuesday with Flash Manufacturing PMI and Flash Services PMI due to be released ahead of the Reserve Bank (RBA) Monetary Policy Meeting Minutes. On Wednesday, traders will be keying on the quarterly Wage Price Index.

Daily AUDUSD Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6812 will signal a resumption of the downtrend. A move through .7029 will change the main trend to up.

The main range is .6629 to .7158. The AUDUSD is currently straddling its 50% level at .6894.

The minor range is .7029 to .6812. It pivot is .6921.

The major upside target is .6985 to .7926. The major downside target is .6760 – .6715.

Daily AUDUSD Technical Forecast

Trader reaction to the 50% level at .6894 is likely to determine the direction of the AUDUSD on Monday.

Bullish Scenario

A sustained move over .6894 will indicate the presence of buyers. This could trigger a quick test of the pivot at .6921. This is a potential trigger point for an acceleration to the upside with .6985 the next key target.

Bearish Scenario

A sustained move under .6893 will signal the presence of sellers. If this creates enough downside momentum then look for a retest of last week’s low at .6812.