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

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

Australian Dollar April rally falters into resistance- June opening-range set
AUD/USD bulls attempt to defend support ahead of US CPI, FOMC interest rate decision
Resistance 6673/90 (key), 6761, 6810/19– Support 6575/80, 6538 (key), 6497

The Australian Dollar is struggling to mount a counter-offensive after plunging more than 1.4% into support last week. The June opening-range is set between well-defined technical levels with key US inflation data and the highly anticipated Fed interest rate decision on tap. 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 a, “5% rally off the yearly low is now testing the first major resistance hurdle- risk for possible topside exhaustion / price inflection here. From at trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 6520 IF price is heading higher on this stretch…” The resistance zone in focus is 6673/90- a region defined by the 2008 low-week close (LWC), the 2019 low, the 61.8% Fibonacci retracement of the late-December decline, and the 100% extension of the April rally. Aussie struggled at into this threshold for weeks before finally tumbling lower last week, post-NFP.

The decline responded to confluent support this week at the 38.2% retracement of the April rally / 100% extension of the May decline at 6575/80- looking for a reaction off this mark heading into the CPI / FOMC tomorrow.

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 April highs with the lower parallel further highlighting near-term support there at 6575/80- a break below this region exposes a more significant confluence at the 200-day moving average / 50% retracement at 6538- losses would need to be limited to this threshold IF Aussie is still heading higher on this stretch. A break / close below this pivot zone would suggest a more significant high was registered last month and exposes the 61.8% retracement at 6496. Broader bullish invalidation for the April advance now raised to at the objective May open near 6473.

Look for initial resistance near the median-line (currently ~6630s) backed again by 6673/90- a breach daily close above this level is still needed to mark uptrend resumption towards subsequent objectives at the January / yearly high-day close (HDC) at 6761 and the next major technical confluence at the 6810/19- a region defined by the 2023/2024 yearly opens and the 61.8% retracement of the 2023 decline.

Bottom line: Aussie has broken below the median-line and threatens further losses while below that slope. That said, we are on the lookout for possible downside exhaustion while above the 200-day moving average. From a trading standpoint, a good region to reduce short-exposure / lower protective stops – losses should b limited to 6538 IF price is heading higher with a close above 6690 still needed to mark resumption.

Note that the monthly opening-range is now set heading into major event risk with US May CPI figures and the FOMC interest rate decision on tap tomorrow. Look for a breakout for further guidance in the days ahead and watch the weekly close here. Review my latest Australian Dollar Weekly Forecast for a closer look at the longer-term AUD/USD technical trade levels.

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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

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