AUD/USD Forex Technical Analysis – September 4, 2014 Forecast

A series of events helped boost the AUD/USD on Thursday. The Forex pair received early support after the release of positive retail sales and international trade figures. Later in the session, the European Central Bank’s decision to provide more liquidity gave the market another boost.

On Thursday, the official retail sales figures rose for a second month in a row in July and were up 5.9 percent in the year to July. The 0.4% rise met trader expectations. Later, it was reported that Australia’s trade deficit fell for a second straight month. The -1.36B reading was lower than the previous reading of -1.56B while beating economists’ estimates of -1.77B.

Also on Thursday, the European Central Bank made the decision to reduce a key interest rate to 0.050% from 0.15%. In addition, it announced it would begin buying covered bonds, or loans backed by payments from a pool of loans, and asset-backed securities in October. This fresh liquidity helped drive up the higher-yielding Aussie.

Technically, the AUD/USD confirmed Wednesday’s closing price reversal bottom and reaffirmed the uptrend on the daily chart when it took out the last swing top at .9373.

The price surge was strong enough to take out a key retracement zone at .9353 to .9381, but the rally stalled at .93915, slightly below a key downtrending angle that comes in at .9392 today.

The close was weak, however, as evidenced by the close back below the 50% level at .9353. The market will have to regain this level and hold it in order to give the Aussie a slight upside bias.

A sustained trade under .9353 will put the market in a position to challenge the nearest uptrending angle at .9348. The new short-term range is .9262 to .93915. This makes its retracement zone at .9327 to .9312 the next likely downside target.

Watch the price action and order flow at .9353 today. Trader reaction to this price should set the tone for the day. Holding above .9353 will set up possible rallies into .9381 and .9392. Taking out .9392 could trigger a rally into .9430.

The inability to overcome .9353 will be an early sign of weakness, but don’t look for an acceleration to the downside unless .9348 is taken out with conviction. This could trigger a move into .9327, .9311 or .9293.