The Australian Dollar is trading nearly flat on Friday after giving back most of its gains from the previous session despite dovish moves by the European Central Bank (ECB). Further, in another sign of just how over extended the Aussie may be, traders are showing a minimal response to this week’s positive developments in U.S.-China trade relations.
At 07:51 GMT, the AUD/USD is trading .6869, up 0.0004 or +0.06%.
On Thursday, the ECB cut its deposit rate by 10 basis points to a record low of minus 0.5% and said it would restart bond purchases at a rate of 20 billion Euros a month from November 1. This is essentially bullish news on paper for higher-yielding assets, but the Aussie failed to follow-through to the upside.
In other news, President Donald Trump signaled Thursday that he would consider an interim trade deal with China, even though he would not prefer it. That’s also potentially bullish news for the Australian Dollar, but Aussie buyers didn’t bite on the news, and short-sellers weren’t spooked either.
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.
On Thursday, the AUD/USD almost posted a potentially bearish closing price reversal top, nonetheless, the price action suggests the selling may be greater than the buying at current price levels.
The minor trend is up. A trade through .6895 will indicate the buying is getting stronger. A trade through .6848 will change the minor trend to down. This will also shift momentum to the downside.
The main range is .7082 to .6677. Its retracement zone at .6880 to .6927 is resistance. It is also controlling the near-term direction of the AUD/USD.
The short-term range is .6688 to .6895. If the minor trend changes to down and momentum shifts to the downside then start watching for a pullback into its retracement zone at .6791 to .6767.
Daily Technical Forecast
Based on the early price action and the current price at .6869, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the main 50% level at .6880 and the downtrending Gann angle at .6882.
A sustained move under .6880 will indicate the presence of sellers. This could lead to a test of the support cluster formed by the minor bottom and the uptrending Gann angle at .6848. This is a potential trigger point for an acceleration to the downside with the first target the short-term 50% level at .6791.
A sustained move over .6882 will signal the presence of buyers. This could lead to a test of .6895. This is a potential trigger point for an acceleration into the main Fibonacci level at .6927.
This article was originally posted on FX Empire
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