AUDUSD Forex Forecast – Testing Channel Resistance

AUDUSD is starting to trend lower, forming a descending channel pattern on its 4-hour time frame. Price is currently testing the resistance near the .7650 minor psychological level and could be due to resume its drop to the channel support at .7450.
Stochastic is turning lower and making its way out of the overbought zone to indicate that sellers are taking control of price action. Also, the 100 SMA is below the longer-term 200 SMA, confirming that the path of least resistance is to the downside.
However, the gap between the moving averages is narrowing so an upward crossover could be due. In that case, Aussie bulls could try to push price higher, especially if the moving averages also hold as near-term dynamic support.
The RBA minutes released last week indicated that the Australian central bank is no longer inclined to cut interest rates in the next few months, citing a relatively upbeat assessment of their economy. On the other hand, the FOMC disappointed dollar bulls by refraining to hike interest rates during their policy decision.
Still, the Fed noted that they’ll be keeping close tabs on data to see if they can be able to tighten monetary policy by the end of the year. There’s not much in the way of US reports this week, though, as traders will have to wait for the NFP report due the following week to gauge if employment continues to improve.
A number of FOMC policymakers are set to make testimonies this week, including George, Tarullo, Bullard, and Fischer. Fed Chairperson Yellen also has a couple of testimonies lined up and she could reiterate their hawkish bias, possibly allowing the dollar to regain ground.
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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.