The AUD/USD is trading slightly higher early Monday in limited action. The price action suggests the major players have taken to the sidelines ahead of Wednesday’s Fed interest rate announcement. I am leaning to the downside because the strength in the crude oil market may be enough to generate concerns over inflation. This would boost U.S. Treasury yields which would make the U.S. Dollar a more attractive investment. So far I haven’t seen any evidence of this, however.
The main trend is up according to the daily swing chart, but momentum has been to the downside since the formation of the potentially bearish closing price reversal top on December 8 at .7507. A trade through .7428 will confirm the reversal top. This could lead to increased selling pressure.
A trade through .7507 will signal a resumption of the uptrend. A trade through .7369 will turn the main trend to down.
The major retracement zone is .7461 to .7386. The market is currently straddling the 50% level at .7461. This price is controlling the longer-term direction of the market.
The main range is .7777 to .7311. Its retracement zone at $.7544 to .7599 is the primary upside target.
Based on the current price at .7454 and the earlier price action, look for a bullish tone to develop on a sustained move over .7461 and a bearish bias to develop on a sustained move under .7439.
Overtaking .7461 could trigger an acceleration into .7509 then .7537.
Falling below .7439 could trigger a sharp break into .7404 and a support cluster at .7386.
There is room to rally over .7461 and room to break hard under .7439. I’m just not sure about the volume today because of the Fed announcement on Wednesday.