The Australian Dollar is inching lower late Thursday, threatening to challenge major chart support. The currency has been pressured for weeks by the dovish Reserve Bank (RBA), but this latest wave of selling pressure began on Wednesday when the Reserve Bank of New Zealand (RBNZ) raised rates by only 25 basis points, catching bulls who had wagered heavily on a half-point hike by surprise.
Volume is well-below average as U.S. traders were out for the Thanksgiving holiday.
At 17:06 GMT, the AUD/USD is trading .7189, down 0.0005 or -0.07%.
Also weighing on the Aussie was the U.S. Federal Reserve meeting minutes which reinforced market expectations that the Fed will raise rates sooner than other major central banks.
Minutes from the November 2-3 meeting indicated the Fed had become more concerned about rising inflation as various policymakers said they would be open to speeding up the taper of their bond-buying program if high inflation held and move more quickly to raise interest rates.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through the intraday low at .7180 will signal a resumption of the downtrend. A move through the September 29 main bottom at .7170 will reaffirm the downtrend.
The minor trend is also down. A trade through .7371 will change the minor trend to up. This will also shift momentum to the upside.
The new minor range is .7371 to .7180. It 50% level at .7276 is the trailing resistance.
The direction of the AUD/USD into the close on Thursday will likely be determined by trader reaction to .7194.
A sustained move under .7194 will indicate the presence of sellers. The first downside target is .7180, followed close by .7170.
We could see a technical bounce on the first test of .7170, but if it fails then look for a possible acceleration to the downside with the August 20, 2021 main bottom at .7106 the next likely downside target.
A sustained move over .7194 will signal the presence of counter-trend buyers. If this move is able to generate enough upside momentum then look for a short-covering rally into .7210, followed by .7228.
A close over .7194 will form a closing price reversal bottom. If confirmed on Friday, this could trigger the start of a 2 to 3 day correction with the next major target coming in at .7276.
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This article was originally posted on FX Empire