Australian Dollar Technical Forecast: AUD/USD Poised for Breakout

Australian Technical Forecast: AUD/USD Weekly Trade Levels

• Australian Dollar rallies more than 1.9% off support- trading below multi-year resistance
• AUD/USD critical range breakout now in focus- FOMC / RBA rate decisions on tap
• Resistance 6794-6818 (key), 6872, 6900- Support 6673/93, 6572(key), 6530

The Australian Dollar rebounded off key support last week with the focus now shifting to a breakout of a pivotal range in AUD/USD. The FOMC and RBA interest rate decisions are on tap over the next two-weeks and once again, the battle lines are drawn for the bulls at the top of a multi-year consolidation pattern. These are the levels that matter on the AUD/USD weekly technical chart.

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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 Technical Forecast we noted AUD/USD had, “rallied into key technical resistance near the yearly highs- risk for possible topside exhaustion / price inflection into this zone in the weeks ahead. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 6673 IF Aussie is heading higher on this stretch…” Aussie plunged nearly 3% off those highs with price registering a low-close at 6670 before rebounding.

Weekly support now rests at 6642/73- a region defined by the 38.2% retracement of the August rally, the 2019 low and the 2008 low-week close. A break below this threshold would threaten a larger setback towards the yearly low-week close (LWC) /52- week moving average at 6571/89 and the 61.8% retracement at 6530- both levels of interest for possible downside exhaustion IF reached.

Critical resistance remains unchanged at 6794-6819- a region defined by the 61.8% extension of the April advance, the objective 2024 yearly open, and the 61.8% Fibonacci retracement of the 2023 decline. Note that the late-2023 consolidation resistance and the 2013 trendlines converge on this threshold over the next few weeks and further highlight the technical significance of this region. A breach / close above is needed to fuel the next leg higher in price towards the December high / 38.2% retracement at 6872, the June 2023 highs at 6900 and 2021 low-week close near 7000.

Bottom line: AUD/USD is trading mid-range heading into the FOMC interest rate decision this week with the immediate focus on a breakout of the 6642-6819 range. From at trading standpoint, losses should be limited to the 52-week moving average IF Aussie is heading for a breakout here.

Both the Fed and the RBA are on tap over the next week- stay nimble into the releases and watch the weekly closes here for guidance. Review my latest Australian Dollar Short-term Outlook for a closer look at the near-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