AUD/USD Forex Technical Analysis – Aussie Jumps as Profit-Takers Hit Greenback

The Australian Dollar is trading higher late in the session on Friday amid a drop in its U.S. counterpart. The greenback is being pressured by profit-taking after a strong rally drive the Australian Dollar into a two-year low. At the same time, investors are evaluating how high Fed policymakers are likely to raise rates at its July 26-27 monetary policy meeting.

At 17:52 GMT, the AUD/USD is at .6792, up 0.0044 or +0.66%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) is trading $67.25, up $0.46 or +0.69%.

The AUD/USD was also supported by a drop in the odds of a 100 basis point Fed rate hike, after two of the most hawkish Fed officials on Thursday said they would prefer a 75 basis points hike.

Fed funds futures now indicate an 81% chance of a 75 basis points increase and a 19% chance of a 100 basis points increase.

Short-Term Outlook

Trader reaction to a minor pivot at .6778 is likely to determine the direction of the AUD/USD into the close on Friday.

Bullish Scenario

A sustained move over .6778 will indicate the presence of buyers. Taking out the minor top at .6804 will change the minor trend to up. This will also shift the momentum. This could extend the rally into a resistance cluster at .6874 – .6876.

The short-term upside target is the retracement zone at .6876 – .6921. Since the main trend is down, sellers are likely to return following a test of this area.

Bearish Scenario

A sustained move under .6778 will signal the presence of sellers. This could trigger a break into a minor pivot at .6743. If this level fails then look for the selling to possibly extend into the minor bottom at .6682.

The minor bottom at .6682 could turn into a major support level. Since it is the last potential support before the May 15, 2020 main bottom at .6402.