AUD/USD Forex Technical Analysis – December 22, 2016 Forecast

The AUD/USD is under pressure on Thursday. The selling is a reaction to the appointment of Peter Navarro, a long-time critic of China’s trade practices to lead a newly formed White House National Trade Council. He is considered to be a hardliner on trade.

The Aussie has been under pressure since the election of Trump as president of the United States on November 8. His plans to build America through aggressive fiscal spending has been deemed inflationary, causing a surge in U.S. Treasury yields. Furthermore, the Fed recently turned hawkish with an interest rate hike and a forecast for possibly three more rate hikes in 2017.

The Reserve Bank of Australia said in its latest monetary policy minutes that it is concerned over the value of the Australian Dollar and its impact on the economy so Fed policy may actually be helping them out.

Lastly, there are concerns that Standard and Poor’s may actually cut the Triple A credit rating of the country.

Technical Analysis

The main trend is down according to the daily swing chart. Momentum is also down. Earlier today, sellers took out the closing price reversal bottom at .7222, negating the chart pattern and signaling a resumption of the downtrend. A new minor top has been formed a .7279.

The next major down side target is the May 24 bottom at .7145.

Forecast

If the momentum continues then look for weakness throughout the session.

Based on the current price at .7198, the nearest upside targets is the last minor bottom at .7222 (old bottoms tend to make new tops). The next two targets are a long-term uptrending angle at .7240 and a downtrending angle at .7284.

On the downside, the chart indicates the AUD/USD has a clear shot at .7145.

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