Australian Dollar Outlook: AUD/USD Threatens Breakout as Bears Test Support Ahead of NFP

Australian Dollar Technical Outlook: AUD/USD Short-term Trade Levels

AUD/USD testing lower bounds of a multi-month consolidation pattern, with the bears probing confluent support
While the near-term trend remains lower, the immediate focus is on a possible price inflection off support as traders brace for Friday’s jobs report
Resistance 6520, 6535/46, 6575 (key)- Support 6459, 6440 (key), 6404/15

The Australian Dollar is testing confluent support today at the lower bounds of a four-month consolidation pattern, with AUD/USD threatening a breakout as traders brace for the highly-anticipated Non-Farm Payroll report. While the near-term risk remains tilted to the downside, the immediate focus is on a reaction off this zone this week, and the employment data tomorrow could prove pivotal for both the Dollar and broader risk sentiment. Battle lines drawn on the Aussie short-term technical charts.

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

Australian Dollar Price Chart – AUD/USD Daily

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

Technical Outlook: In my last Australian Dollar Short-term Outlook we noted that AUD/USD was approaching support and that, “From a trading standpoint, a good region to reduce short-exposure / lower protective stops- rallies should be limited to 6545 IF price is heading lower on this stretch with a close below the October lows needed to fuel the next leg of this decline.” Aussie rallied more than 1.8% off those lows and despite registering an intraday high at 6580, price was unable to mark a daily close above the monthly open at 6545. The subsequent decline has erased the entire rally with Aussie now testing confluent support at the monthly low. We are looking for possible inflection off this zone as AUD/USD tests the lower bounds of a multi-month consolidation structure ahead of major event risk.

Australian Dollar Price Chart – AUD/USD 240min

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

Notes: A closer look at Aussie price action shows AUD/USD plunging into support today at 6459- a region defined by the November opening-range low, the 200-day moving average and the August trendline. Losses below this threshold would constitute a break of the objective monthly range with a close below the October low at 6440 needed to validate a breakout of a four-month consolidation pattern. Subsequent support objectives are eyed at the 38.2% retracement of the yearly range and the August low at 6404/15, and the June low at 6373. The next major technical consideration rests with the 2024 August low and the 100% extension of the September decline at 6348/51.

Initial resistance is now eyed at the September low-day close at 6520 and is backed by weekly / monthly open at 6535/46. Ultimately, a breach / close above the Fed-day reversal close at 6575 would be needed to validate a breakout of this consolidation and would suggest a more significant low is in place / a larger trend reversal is underway.

Bottom line: AUD/USD is testing confluent support here with major event risk on tap tomorrow. A good zone to reduce portions of short-exposure / lower protective stops- rallies should be limited to 6520 IF price is heading for a break lower on this stretch with a close below 6440 ultimately needed to fuel the next major leg of this decline.

Keep in mind the September Non-Farm Payroll report is on tap tomorrow, and traders will be closely eyeing the first major jobs report in months. Fed Fund Futures have continued to discount the December rate decision with market participants now pricing the probability of a cut next month to just 42%. With recent Fed commentary suggesting the committee remains deeply divided on the path of interest rates and with inflation still running well-above target, employment data will be critical ahead of next month’s policy meeting. Stay nimble ahead of the release and watch the weekly close for guidance. Review my latest Australian Dollar Weekly Forecast for a closer look at the longer-term AUD/USD technical trade levels.

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Written by Michael Boutros, Sr Technical Strategist

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