AUDUSD Forecast – Rebounding Ahead of US Initial Claims, RBA Quarterly Outlook

The Australian Dollar is edging higher on Thursday, continuing this week’s choppy price action as traders try to recover from yesterday’s steep setback.

The currency is being weighed on by a stronger U.S. Dollar, which continues to find support in the wake of last week’s robust jobs and services data that caused an agonizing squeeze on short U.S. Dollar positions that left scars on many trading accounts. Nonetheless, the Aussie is still being supported by the prospect of higher domestic interest rates.

At 06:28 GMT, the AUDUSD is trading .6962, up 0.0038 or +0.55%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $68.46, down $0.35 or -0.51%.

Looking ahead, the Reserve Bank of Australia issues its quarterly outlook on the economy on Friday and will likely revise up forecasts for core inflation and wages, while headline inflation is not seen slowing to the top of the 2-3% target band until mid-2005.

Traders are also likely to react to today’s U.S. Weekly Unemployment Claims report that could offer clues into the strength of the country’s labor market. It is expected to show that jobless claims rose to 191K from 183K.

Daily AUDUSD Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6856 will signal a resumption of the downtrend. A move through .7158 will change the main trend to up.

The nearest resistance is a minor retracement zone at .7007 to .7043. The closest support is a short-term 50% level at .6893.

Daily AUDUSD Technical Forecast

Trader reaction to .6926 is likely to determine the direction of the AUDUSD on Thursday.

Bullish Scenario

A sustained move over .6926 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to take a run at the .7007 to .7043 retracement zone.

Bearish Scenario

A sustained move under .6926 will signal the presence of sellers. This could lead to a test of the 50% level at .6893, followed by the main bottom at .6856. This level is a potential trigger point for an acceleration into a long-term 50% level at .6760.