The Australian Dollar is trading higher early Thursday, underpinned by an easing of tensions between the United States and China. Gains are likely being capped by uncertainty over the European Central Bank’s monetary policy decision due to be released at 11:45 GMT. Traders will also get the opportunity to respond to the latest data from the U.S. on consumer inflation and weekly unemployment claims.
At 06:13 GMT, the AUD/USD is trading .6882, up 0.0019 or +0.27%.
Late Wednesday, President Donald Trump tweeted that he will delay increasing tariffs on $250 billion worth of Chinese goods from October 1 to October 15 as a “gesture of good will” to China.
Trump said the postponement came “at the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary.”
This news could be an early sign of improving tensions between the two economic powerhouses, which is potentially bullish for the Australian Dollar.
Daily Technical Analysis
The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom at .6688 on September 3. A trade through .6688 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The main trend will change to up on a move through .7082. This is highly unlikely, but the odds of this occurring will increase if buyers can overcome the main retracement zone.
The minor trend is up. This is supporting the upside momentum. A trade through .6848 will change the minor trend to down. This will shift momentum to the downside.
The main range is .7082 to .6677. Its retracement zone at .6880 to .6927 is resistance. This zone is currently being tested. This zone is controlling the near-term direction of the AUD/USD.
The short-term range is .6688 to .6887. If momentum shifts to the downside then look for a potential break into its retracement zone at .6787 to .6764.
Daily Technical Forecast
Based on the early price action and the current price at .6882, the direction of the AUD/USD on Thursday is likely to be determined by trader reaction to the downtrending Gann angle at .6887 and the main 50% level at .6880.
A sustained move over .6887 will indicate the presence of buyers. This could trigger an acceleration to the upside with the next target the main Fibonacci level at .6927.
A sustained move under the main 50% level at .6880 will signal the presence of sellers. The first target is the minor bottom at .6848. This is a potential trigger point for an acceleration into an uptrending Gann angle at .6828.
Look for a bounce on the first test of .6828, but if it fails then look for another acceleration to the downside with the next target the short-term 50% level at .6788.
The AUD/USD is up seven sessions from its last main bottom so don’t be surprised by a closing price reversal top. This could lead to a break into .6788 to .6765. If AUD/USD is going to move higher then buyers will come in on a test of this area in an effort to form a potentially bullish secondary lower bottom.
This article was originally posted on FX Empire
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