Australian Dollar Forecast: AUD/USD Breakout at Risk into Fed

Australian Technical Forecast: AUD/USD Weekly Trade Levels

AUD/USD breakout extends to fresh yearly highs- attempting to mark four-week advance
Aussie rally may be vulnerable into uptrend resistance just higher– Fed on tap
Resistance 6671, 6723 (key), 6795-6811- Support 6550/76 (key), 6469, 6440

A breakout in the Australian Dollar is attempting to mark a fourth consecutive weekly advance with the AUD/USD testing initial resistance this week. The focus now shifts to the Federal Reserve interest rate decision tomorrow and while the border outlook remains constructive, the advance may be vulnerable in the days ahead as price approaches uptrend resistance. Battle lines drawn on the AUD/USD weekly technical chart ahead of FOMC.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Aussie setup and more. Join live on Monday’s at 8:30am EST.

Australian Dollar Price Chart – AUD/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; AUD/USD on TradingView

Technical Outlook: In last month’s Australian Dollar Forecast we noted that AUD/USD was, “trading just below multi-year downtrend resistance with the immediate focus still on a breakout of the July 28^th weekly candle for guidance.” The range held into the September open with last week’s rally breaching major resistance at 6550/76- a region defined by the 61.8%retracement of the 2024 decline, the July high-close, and the August 2024 low-week close (LWC).

The subsequent rally has now extended more than 4% off the August low with AUD/USD testing resistance today at the 2019 swing low at 6671. The outlook remains constructive while above 6550 with a breach here exposing the next major technical consideration at the upper parallel / 78.6% retracement near 6723- area of interest for possible top-side exhaustion / price inflection IF reached. Subsequent resistance seen at the 2024 high0week close (HWC) / 2024 yearly open at 6795-6811 and the 2023 June high / 2024 high-close at 6900/02.

Key support rests back 6550/76 and a break / weekly close below would be needed to suggest amore significant high is in place / a larger reversal is underway. Subsequent support objectives seen at the July LWC at 6496 and the 52-week moving average, currently near 6440.

Bottom line: The AUD/USD breakout is approaching uptrend resistance with the FOMC interest rate decision on tap tomorrow- From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards the upper parallel – losses should be limited to 6550 IF price is heading higher on this stretch with a close above 6722 needed to fuel the next major leg of the advance.

Keep in mind we get the release of the updated Summary of Economic Projections from the Fed tomorrow and traders will be focused on the updated interest rate dot plot as well as the forecasts on growth, inflation, and employment. Markets are fully priced for a 25bp cut tomorrow with Fed Fund Futures calling for three-cuts this year. Stay nimble into the release and subsequent presser and watch the weekly close here for guidance. Review my latest Australian Dollar Short-term Outlook for a closer look at the near-term AUD/USD technical trade levels.

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--- Written by Michael Boutros, Sr Technical Strategist

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