The Australian Dollar is down against the U.S. Dollar on Friday after the Reserve Bank (RBA) said it is prepared to expand bond purchases if needed to support the economy. However, losses were limited because investors expect the greenback to weaken no matter who takes over the White House in the United States. On Thursday, the Aussie jumped against the greenback as long-term U.S. bond yields fell and demand for risky assets soared.
At 04:58 GMT, the AUD/USD is trading .7261, down 0.0026 or -0.35%.
The RBA on Friday nudged up its forecasts for near-term economic activity but warned that a drastic downturn in population growth meant the economy would be “noticeably smaller” than assumed pre-pandemic.
In its monetary policy statement, the RBA said it was not contemplating cutting rates any further as it judged there was little to gain from moving to negative rates. In the meantime, the focus would be on its asset buying program.
“If the circumstances require, the Board is prepared to do more and undertake additional purchases,” the RBA said.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Thursday when buyers took out the October 9 main top at .7243. The main trend will change to down on a move through .6991.
The short-term range is .7414 to .6991. The AUD/USD is currently trading on the strong side of its retracement zone at .7252 to .7202, putting it in a bullish position. This zone is new support and it’s also controlling the near-term direction of the Forex pair.
The major support zone is .7095 to .7020. This zone is controlling the longer-term direction of the AUD/USD. Traders built a support base inside this zone recently.
Daily Swing Chart Technical Forecast
The early price action suggests the direction of the AUD/USD on Friday will be determined by trader reaction to the short-term Fibonacci level at .7252.
A sustained move over .7252 will indicate the presence of buyers. Taking out yesterday’s high at .7289 will indicate the buying is getting stronger. This could trigger a surge into the September 16 main top at .7345. This is the last potential resistance before the September 1 main top at .7414.
A sustained move under .7252 will signal the return of sellers. This could trigger a break into the short-term 50% level at .7202. Buyers could come in on the first test of this level, but if it fails, there could be an acceleration to the downside with .7140 the first downside target, followed by .7095.