Australian Dollar Forecast: AUD/USD Drops 4%—Uptrend Faces First Major Test

Australian Technical Forecast: AUD/USD Weekly Trade Levels

AUD/USD has fallen more than 4% from the yearly highs after breaking below key trend support.
Price is now approaching a major support zone that could determine the fate of the broader uptrend- risk for inflection.
A break below support would signal a deeper correction is underway while a hold could stabilize the recent selloff / register a meaningful low.
Event risk on tap: RBA & FOMC interest rate decisions next week
Resistance 7116 (key), 7208/13, 7295- Support 6943/56 (key), 6877/80, 6764

AUD/USD remains under pressure after a sharp reversal from the yearly highs, with the decline now approaching a major support confluence that could prove pivotal for the broader trend. The selloff has driven momentum to its weakest levels in months and brings the multi-month uptrend into focus as price nears a critical technical threshold. The reaction here could offer important clues on whether the recent weakness evolves into a larger correction or marks the beginning of a stabilization phase. 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 AUD/USD was, “testing confluent uptrend support this week and the focus is on a reaction off the median line in the days ahead. From a trading standpoint, rallies would need to be limited to 7213 IF Aussie is heading for a larger pullback here with a close below 7100 needed to fuel the next leg of the correction.” Aussie briefly registered an intraweek high at 7201 the following week before reversing sharply lower with a break below the median-line extending more than 4% off the yearly high. Although momentum has reached the lowest levels since November, weekly RSI remains just above 50- and the pressure is on as price approaches key technical hurdles.

A major support confluence rests just lower at 6943/56- a region defined by the 2024 swing high and the 23.6% retracement of the 2025 advance. Note that the lower parallel of the November pitchfork converges on this threshold over the next few weeks. Look for a large reaction there IF reached with a break / weekly close below needed invalidate the multi-month uptrend and threaten a deeper pullback for Aussie. Subsequent support objectives rest at the March close low and the 1.618% extension of the May decline at 6877/80 and the 52-week moving average, currently near 6763.

Weekly resistance is eyed at the February high close at 7116- strength beyond this level would suggest a more significant low is in place with a breach / close above 7208/14 ultimately needed to mark resumption of the broader uptrend. Subsequent resistance eyed at the yearly / 2019 highs at 7278/95.

Bottom line: AUD/USD has plunged to the lowest levels in nearly nine-weeks with price now approaching confluent uptrend support. Watch the weekly close with regards to the 70-handle tomorrow for guidance. Risk for price inflection in the days ahead with the immediate short bias is vulnerable while above the 2024 high. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards the 6950s- rallies would need to be limited to 7116 IF price is heading lower on this stretch with a close below parallel support needed to fuel the next leg lower.

Keep in mind the RBA & FOMC rate decisions are on tap next week. While both central banks are widely expected to leave rate unchanged, traders will be closely examining policy remarks from newly minted Chair Kevin Warsh amid ongoing concerns regarding the inflationary outlook. CPI & PPI data this week highlighted continued upward pressure on prices and with the labor markets seemingly on stable footing, the committee may be forced to adjust policy in the months ahead. As of now, Fed Fund Futures are pricing a 70% probability the central bank will need to hike at least 25 basis points before the end of the year. Traders will also be looking to possible changes in Fed communications as we await the central bank’s updated Summary of Economic Projections. Stay nimble into the releases and watch the weekly closes for guidance here. I will publish an updated Australian Dollar Short-term Outlook once we get further clarity on the near-term AUD/USD technical trade levels.

Australia / US Economic Calendar

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.