AUD/USD Forex Technical Analysis – Traders Shrug-off Weak China PMI Data; Focus on RBA Rate Decision

The Australian Dollar is edging higher on Monday as traders prepare for monetary policy and interest rate decisions from the Reserve Bank of Australia (RBA) and the U.S. Federal Reserve later in the week.

On Tuesday, the RBA is expected to announce a 25-basis point rate hike despite last week’s red hot consumer inflation report. On Wednesday, the Fed is widely expected to raise its benchmark rate by 75-basis points and announce it may slow down the pace of rate hikes at its December meeting.

At 03:54 GMT, the AUD/USD is trading .6422, up 0.0010 or +0.15%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $63.51, down $0.42 or -0.66%.

In economic news, the MI Inflation Gauge dipped to 0.4% from 0.5%. Private Sector Credit met expectations with a 0.7% reading and Retail Sales beat the forecast with a 0.6% reading.

In China, Manufacturing PMI contracted to 49.2 from 50.1 and Non-Manufacturing fell from 50.6 to 48.7, also indicating a contraction.

The RBA faces a tough challenge in deciding whether to persist with smaller interest rate hikes or U-turning back to outsized hikes to try to gain control of hotter-than-expected inflation.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6458 will change the main trend to up. A move through .6170 will signal a resumption of the downtrend.

The minor trend is up. However, momentum shifted lower on Friday following the confirmation of Thursday’s closing price reversal top. A trade through .6211 will change the minor trend to down. This will confirm the shift in momentum.

On the upside, the major resistance is a long-term Fibonacci level at .6466. This is followed by a resistance cluster at .6543.

The minor range is .6170 to .6522. Its 50% level or pivot at .6346 is support.

Daily Swing Chart Technical Forecast

Trader reaction to .6413 is likely to determine the direction of the AUD/USD on Monday.

Bullish Scenario

A sustained move over .6413 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into .6466.

Buyers could face a challenge on the first test of .6466, but overcoming it could trigger a surge into the resistance cluster at .6543 – .6548.

Bearish Scenario

A sustained move under .6413 will signal the presence of sellers. Taking out .6389 will indicate the selling is getting stronger with the pivot at .6346 the next key target.