Australian Dollar Forecast: AUD/USD Breakout Fails—Support Now Critical

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Australian Technical Forecast: AUD/USD Weekly Trade Levels

• AUD/USD has reversed sharply after failing to hold a breakout above major resistance.
• Price is now testing a key uptrend support zone near the lows of the May range.
• A break below support would signal a larger correction is underway while a hold could stabilize the decline and preserve the broader uptrend.
• Event risk on tap: Australia & U.S. inflation data next week
• Resistance 7200/14 (key), 7295, 7427- Support 7108 (key), 7003, 6877

AUD/USD is under renewed pressure after reversing sharply from the yearly highs and falling back below a major breakout zone. The decline has shifted focus to a critical uptrend support area that now stands as the key line of defense for the broader bullish structure. While the longer-term trend remains constructive, the recent failure at resistance leaves the Aussie vulnerable to a deeper pullback if support gives way in the sessions ahead. 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 my last Australian Dollar Forecast we noted that AUD/USD was ranging just below pivotal resistance and to, “look for the breakout in the days ahead for guidance with the broader long-bias vulnerable near-term while below this key threshold. From a trading standpoint, losses would need to be limited to 7077 IF price is heading higher on this stretch with a breach / close above 7214 needed to fuel the next major leg of the advance.” Aussie broke higher later that week with price registering an intraday high at 7278 before reversing sharply back below resistance last week.

The pullback broke the May opening range lows last week with the decline now testing confluent support near the 38.2% retracement of the March rally at 7108. Not that the median line converges on this threshold over the next few weeks and a break / weekly close below this slope would be needed to suggest a more significant high is in place and a larger trend reversal is underway. Subsequent support rests with the 61.8% retracement of the March advance at 7003 with broader bullish invalidation at the March close low near 6877.

Key weekly resistance is eyed at 7200/14- a region defined by the objective monthly open, the 100% extension of the 2025 advance and the 61.8% retracement of the 2021 decline. A breach / weekly close above this threshold is needed to mark uptrend resumption towards the 2019 high at 7295 and the 2022 high-week close (HWC) at 7427.

 

Bottom line: Aussie is 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.

Keep in mind we get the release of key inflation data from Australia and the U.S. next week. With the negotiations reaching an impasse with regards to Iran’s enriched uranium stockpile, concerns regarding the impact of high energy prices have continued to push interest rate expectations higher across the developed economies. Consequently, inflation data will remain paramount in the weeks ahead as we await a resolution. Stay nimble into the releases and watch the weekly closes for guidance here. Review my latest Australian Dollar Short-term Outlook for a closer look at the near-term AUD/USD technical trade levels.

Australia / US Economic Calendar

 

Economic Calendar - latest economic developments and upcoming event risk.

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex