AUD/USD Forex Technical Analysis – July 18, 2017 Forecast
The AUD/USD is surging to the upside on Tuesday in reaction to the minutes of the Reserve Bank of Australia’s July monetary policy minutes. The Forex pair is now testing its highest level since the week-ending May 15, 2015.
Traders are reacting to the news that the RBA signaled that the “neutral nominal cash rate” would need to rise to around 3.5 percent to keep inflation in check and growth at reasonable levels. About two weeks ago, the central bank left its main interest rate at 1.5 percent.
This news implies a 2 percentage point increase in official interest rates from their current level, although there was no hint how long it might take to get there.
Technical Analysis
The main trend is up according to the daily swing chart. Today’s rally overcame yesterday’s closing price reversal top at .7838 while proving its strength with its sustained rally over the April 21, 2016 main top at .7834.
The daily chart shows there is plenty of room to the upside with the May 4, 2015 main top at .8162 the next major target. However, I don’t think the market will get there over the near-term since the RBA may not even start raising rates for a year.
On the downside, the new support is .7834, followed by .7777.
Forecast
Based on the current price at .7937, the direction of the AUD/USD is likely to be determined by trader reaction to the steep uptrending angle at .7931.
A sustained move over .7931 will indicate the buying is getting stronger. It will also put the Aussie in an extremely bullish position.
The inability to overcome the angle at .7931 will signal the return of sellers in the form of profit-taking.
This article was originally posted on FX Empire