Australian Dollar Short-term Outlook: AUD/USD Battle Lines Drawn

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

• Australian Dollar surges nearly 3.5% off yearly low- clears February range
• AUD/USD pullback off uptrend resistance at initial support- weekly opening-range breakout pending
• Resistance 6566/67, 6707(key), 6780– Support 6581, 6560, 6525/28 (key)

The Australian Dollar surged nearly 3% off the March low with a breakout of the February range stretching into uptrend resistance last week. A two-day pullback responded to initial support today and the focus now shifts to a breakout of the weekly opening-range for guidance here. These are the updated targets and invalidation levels that matter on the AUD/USD short-term technical chart.

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, “the weekly opening-range is preserved within the broader wedge formation heading into Friday and we’re looking for the breakout to offer guidance here. Ultimately, a close above 6567 would be needed to suggest a larger reversal is underway.” Aussie broke higher the following day with the price rallying more than than 3.7% off the yearly low into the March open.

The advance faltered at ahead of confluent resistance last week at 6670/73 – a region defined by the 2008 low-week close (LWC) and the 2019 low. The focus is on this pullback and while the trade remains constructive while within this formation, the immediate advance may still be vulnerable here.

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 trading within the confines of an ascending pitchfork formation with the upper parallel further highlighting the 6670/73 resistance zone. Note that the weekly opening-range is preserved, and the immediate focus is on a breakout in the days ahead.

Initial support rests with the 38.2% retracement at 6581 and is backed closely by the 200-day moving average (currently ~6560).  Bullish invalidation now raised to the December & January lows / 61.8 Fibonacci retracement at 6525/29.

A topside breach of the weekly opening-range would keep the focus on a test of the 61.8% retracement of the December decline at 6707. Note that this level converges on the upper parallel over the next few days – look for a larger reaction there IF reached with a weekly close above needed to fuel the next leg higher in price towards 6780. The next major resistance level is eyed at the 2023/2024 yearly opens / 61.8% retracement at 6810/18.

Bottom line: The Australian Dollar has broken the February range highs with this recent advance responding to uptrend resistance – on the lookout for a possible exhaustion low in the days ahead. From at trading standpoint, losses should be limited to 6525 IF price is heading higher on this stretch with a breach / close above 6707 needed to fuel the next 

Keep in mind both the RBA and FOMC interest rate decisions are on tap next week and could fuel some volatility here- stay nimble into the releases 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 with FOREX.com

Follow Michael on X @MBForex