Australian Dollar Forecast: AUD/USD Rejected at Resistance
AUD/USD plunged more than 2% this week with a reversal from trend resistance gathering pace ahead of NFPs. Battle lines drawn on the Aussie weekly technical chart.
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Australian Technical Forecast: AUD/USD Weekly Trade Levels
- AUD/USD reverses at multi-year trend resistance- poised to mark largest weekly decline since March
- Aussie post-Fed decline approaching initial support- NFPs on tap into August open
- Resistance ~6560, 6550/77 (key), 6671- Support 6409, 6354/6357 (key), 6291/95
The Australian Dollar plunged more than 2% this week, with AUD/USD teetering on the edge of a sixth consecutive daily loss. A reversal from multi-year trend resistance now threatens to break the April advance with Non-Farm Payrolls on tap into the monthly cross. Battle lines drawn on the AUD/USD weekly technical chart.
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 the AUD/USD was, “testing critical resistance for an eighth-consecutive week. From a trading standpoint, losses should be limited to the 52-week moving average IF price is heading higher on this stretch with a close above 6550 needed to fuel the next move.” Aussie closed above 6550 two-weeks later with price registering an intraweek high at 6625 before exhausting. Yesterday’s Fed-induced sell-off broke through the monthly opening-range lows / 52-week moving average with the bears now poised to mark a sixth-consecutive daily decline.
It's worth noting that weekly momentum peaked at 60 on the April advance with RSI now poised to close back below 50. The observation suggests the broader downtrend remains intact and a pivot / break below slope support could mark trend resumption.
Initial weekly support is eyed with the February high at 6408 and is backed by the 38.2% retracement of the yearly range / February high-week close (HWC) at 6354/57. A break / daily close below this region would be required to suggest that a more significant high is in place, potentially signaling a larger reversal underway. In such a scenario, the next downside objectives would be the yearly low-week close and 2023 low-close at 6291/96, followed by the 61.8% retracement and 2022 low-close at 6186–6201. Both of these zones are key areas of interest for potential downside exhaustion / price inflection IF reached.
Look for initial resistance back at the 52-week moving average (currently ~6460) with key resistance now seen back at the 61.8% retracement / yearly high-close at 6550/77. Note that the upper parallel converges on this threshold over the next few weeks and further highlights the technical significance of this zone. Ultimately a breach / weekly close above the 2021 trendline (red) would be needed to validate a breakout of the multi-year downtrend in Aussie.
Bottom line: A reversal off downtrend resistance is now approaching initial support- risk for trend resumption heading into August. From a trading standpoint, the immediate focus is on the weekly close with respect to 6400- rallies should be limited to the 52-week moving average IF Aussie is heading lower on this stretch with a close below needed to keep the immediate short-bias viable heading into the monthly cross.
Keep in mind we get the release of key US employment data tomorrow with Non-Farm Payrolls on tap. Stay nimble into the release and watch the weekly close / August opening-range for guidance 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
Follow Michael on X @MBForex
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