AUD/USD Forex Technical Analysis – Bulls Betting US Producer Price Data Confirms Cooling Inflation

The Australian Dollar is inching higher in limited price action on Tuesday. Traders appear to be waiting for movement in U.S. Treasury yields and the U.S. Dollar before picking a direction. The tight trading range and low volatility suggests last week’s two-day surge following the release of tepid U.S. consumer inflation data may have been overdone.

Traders showed little reaction to the minutes from the Reserve Bank’s (RBA) meeting as it seemed to deliver as promised with no material surprises. Traders also failed to react in a major way to weak economic data from China.

Buyers, however, are likely being tentative because of comments from two Fed officials who reminded them that the Federal Reserve is still going to raise interest rates until inflation is tamed.

At 06:33 GMT, the AUD/USD is trading .6715, up 0.0015 or +0.22%. On Monday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $66.30, down $0.09 or -0.14%.

Although all eyes are on U.S. Treasury yields and Fed speakers, traders will get the opportunity to react to key reports on manufacturing and producer inflation later today.

At 13:30 GMT, the Empire State Manufacturing Index is expected to come in at -6.1, better than the -9.1 reported last month. The Producer Price Index (PPI) is expected to come in at 0.4% and the Core PPI is estimated to have risen by 0.3%.

Higher-than-expected PPI data could put upward pressure on yields, while weighing on the Aussie. Lower-than-expected PPI numbers could launch another strong rise in the AUD/USD.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Monday’s closing price reversal top suggests momentum may be getting ready to shift to the downside. A trade through .6663 will confirm the chart pattern.

A trade through .6724 will negate the chart pattern and signal a resumption of the uptrend. A move through .6747 will reaffirm the uptrend.

The main trend will change to down on a trade through .6386.

On the upside, the nearest resistance is the long-term 50% level at .6760. On the downside, the nearest support is a Fibonacci level at .6631 and a 50% level at .6543.

Daily Swing Chart Technical Forecast

Trader reaction to .6694 is likely to determine the direction of the AUD/USD on Tuesday.

Bullish Scenario

A sustained move over .6694 will indicate the presence of buyers. Taking out .6724 will indicate the buying is getting stronger.

A move through .6747 will reaffirm the uptrend with .6760 the next target. This is a potential trigger point for an acceleration to the upside with the September 13, 2022 main top at .6916 the next major target.

Bearish Scenario

A sustained move under .6694 will signal the presence of sellers. Taking out .6663 will shift momentum to the downside. This could trigger a further break into .6631. This is a potential trigger point for an acceleration into .6543.