AUD/USD Forex Technical Analysis – Strengthens Over .7786, Weakens Under .7733

The Australian Dollar is edging higher on Thursday but remains inside last Friday’s wide range, which suggests investor indecision and impending volatility. Traders are likely waiting for their next catalyst after another spike in global bond yields spooked investors away from riskier assets the previous session, though sentiment was aided by data showing a record Australian trade surplus.

At 06:38 GMT, the AUD/USD is trading .7798, up 0.0022 or +0.29%.

On Wednesday, the renewed selloff in Treasuries rippled through local markets with yields on Australian 10-year bonds popping back up to 1.79%, from a low of 1.628% at the start of the week.

In other news, the domestic economy is faring well with figures out this week showing the strongest two quarters of growth on record, while the country’s trade surplus swelled to an historic high of A$10.1 billion ($7.86 billion) in January.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7692 will signal a resumption of the downtrend. The main trend will change to up on a move through .8007.

The short-term range is .7564 to .8007. Aggressive counter-trend buyers are trying to establish support inside its retracement zone at .7785 to .7733. This zone is also controlling the near-term direction of the AUD/USD.

The minor range is .8007 to .7692. Its retracement zone at .7850 to .7887 is the primary upside target.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday will be determined by trader reaction to the short-term 50% level at .7785.

Bullish Scenario

A sustained move over .7786 will indicate the presence of buyers. This could create the upside momentum needed to challenge .7850 to .7887.

Since the main trend is down, look for sellers to come in on the first test of .7850 to .7887. They are going to try to form a potentially bearish secondary lower top. Aggressive counter-trend buyers are going to try to overcome .7887 in an effort to trigger an upside breakout.

Bearish Scenario

A sustained move under .7785 will signal the presence of sellers. The first downside target is .7733, followed by .7692. This price is a potential trigger point for an acceleration to the downside with the next major target the February 2 bottom at .7564.

Side Notes

Another steep decline in the bond market will send the AUD/USD sharply lower. While the Reserve Bank of Australia (RBA) has now bought around 60% of the cash April 2024 bond on issue, it has less control of the futures market which is far more deep and liquid.

Look for volatility at 17:05 GMT when Fed Chair Jerome Powell speaks.

AUD/USD investors are anxious to see if Powell expresses concern about a recent volatile sell-off in Treasuries and if there is any change in his assessment of the economy before the Fed’s next meeting ending March 17.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.