AUD/USD Buyers Backing Down from .7441, .7471 Main Tops

The Australian Dollar is inching lower on Monday after giving back an earlier gain. With hawkish-expectations from the Federal Reserve already priced in, the near-term outlook for the Aussie is strong because of the ongoing recovery in global risk sentiment, which would typically support a risk friendly currency.

At 03:15 GMT, the AUD/USD is trading .7403, down 0.0012 or -0.16%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $73.49, up $0.30 or +0.41%.

Last week, the Australian Dollar posted a hefty gain as risk sentiment improved even as commodity prices stayed key high, an especially bullish mix for the resource-rich currency.

Traders have also turned hawkish on the Reserve Bank of Australia (RBA) with the futures market narrowing the odds of a rate hike. The current pricing predicts the RBA will raise its 0.1% cash rate by June, following a very strong jobs report last Thursday. Futures now imply rates will be around 1.40% by the end of the year, compared to 0.8% back in January.

The RBA’s next policy meeting is on April 5 and there is some speculation it may drop a reference to being “patient” on rate hikes given the tightening labor market and accelerating inflation at home, Reuters reported.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at .7425 will signal a resumption of the uptrend. A move through .7165 will change the main trend to down.

The main range is .7556 to .6967. The market is trading on the strong side of its retracement zone at .7331 to .7261, making it support.

The short-term range is .6967 to .7441. Its retracement zone at .7173 to .7125 is additional support. This area stopped the selling at .7165 on March 15.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Monday is likely to be determined by trader reaction to .7415.

Bullish Scenario

A sustained move over .7415 will indicate the presence of buyers. Taking out the intraday high at .7425 will indicate the buying is getting stronger. If this move creates enough upside momentum then look for the rally to possibly extend into the main top at .7441, followed by the November 4, 2021 main top at .7471.

Bearish Scenario

A sustained move under .7415 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the main Fibonacci level at .7331. Since the main trend is up, buyers are likely to come in on a test of this level.

Side Notes

A close under .7415 will form a minor closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.