Australian Dollar Short-term Outlook: AUD/USD Defends 2024 Low

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

• Australian Dollar plunges more 6.6% off July high to register fresh yearly low
• AUD/USD recovery already up more than 3%- risk for larger price inflection / recovery
• Resistance 6541, ~6591, 6626 (key)– Support 6497, 6433, 6362 (key)

The Australian Dollar plunged to fresh yearly lows yesterday with AUD/USD turning just pips from multi-year trend support. The recovery has nearly pared the entire August decline with the bulls now eyeing a possible breakout of the July downtrend. Battle lines drawn on the AUD/USD short-term technical charts.

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Australian Dollar Price Chart – AUD/USD Daily

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

Technical Outlook: In last month’s Australian Dollar Short-term Outlook we noted that AUD/USD was responding to confluent resistance while highlighting, “the potential for a larger correction remains while below 6800 and a break of this rising wedge formation would threaten a meaningful pullback.” A confirmed break lower the following week plunged more than 6.6% off the July high with Aussie briefly registering a fresh yearly low at 6348 yesterday. AUD/USD rebounded sharply just ahead of the 2022 trendline and the subsequent recovery has already rallied more than 3% off the weekly low - is a near-term exhaustion low in place?

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 a descending channel formation extending off the July high. Note that the weekly opening-range high is now set just below the objective monthly-open at 6541 with channel resistance converging on this region over the next 48-hours. This is the first hurdle for the bulls.

A breach of this formation would expose the 200-day moving average (currently ~6591) and the 61.8% retracement of the July decline at 6627- a breach / daily close above this level is needed to suggest a more significant low was registered yesterday with broader bearish invalidation steady at the 6670/93 pivot zone.

The low-day close (LDC) of the year is now defined by 6497– look for initial support there on pullbacks with a break / close below the April LDC at 6433 needed to mark downtrend resumption towards channel support / April lows at 6362.

Bottom line: Aussie has now defended the yearly lows with the weekly range set just below the objective August-open- looking for a reaction there IF reached. From a trading standpoint, pullbacks should be limited to the low-day close IF price is heading for a near-term breakout with a close above 6627 needed to validate yesterday’s low.

Keep in mind we get the release of key US inflation data and Australia employment next week with the monthly opening-range still intact. Stay nimble into the releases and watch the weekly closes for guidance here. I’ll publish an updated Australian Dollar Weekly Forecast once we get further clarity on the longer-term AUD/USD technical trade levels.

Key AUD/USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex