AUD/USD Forex Technical Analysis – Closed on Strong Side of Short-Term Retracement Levels

Lower Treasury yields helped boost the Australian Dollar on Friday. The currency reversed early weakness after a U.S. government report on economic growth came in as expected.

The AUD/USD settled at .7402, up 0.0025 or +0.34%.

A government report released on Friday showed that economic growth jumped in the second quarter at its fastest pace in nearly four years. According to the Department of Commerce, U.S. Gross Domestic Product rose 4.1 percent, its best pace since the third quarter of 2014 and the third-best growth rate since the Great Recession.

Despite the strong growth in the economy, which should have raised expectations for additional rate hikes by the Fed later in the year, U.S. Treasury yields fell on Friday as investors questioned whether the high growth rates will be sustainable especially in light of historically low levels of unemployment.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned higher early in the week when buyers took out .7443. A trade through .7465 will signal a resumption of the uptrend with .7484 the next target top. A move through .7318 will change the main trend to down.

The minor trend is also up. A trade through .7359 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is .7318 to .7465. Its 50% to 61.8% retracement zone at .7392 to .7364 provided support on Friday.

The intermediate range is .7310 to .7484. The AUD/USD closed on the strong side of its 50% level or pivot at .7398, helping to support the upside bias. This level is also support.

The main range is .7677 to .7310. Its retracement zone at .7494 to .7537 is the primary upside target.

Daily Swing Chart Technical Forecast

Based on last week’s price action and the close at .7402, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to .7398.

A sustained move over .7398 will indicate the presence of buyers. If this generates enough upside momentum, buyers may make a run at .7465, followed by .7484 then .7494.

A sustained move under .7398 will signal the presence of sellers. This could lead to a quick test of .7392, followed by .7374. Additional downside targets are .7370 and .7359. The close proximity of the potential support levels suggests the selling will be labored.

However, we could see an acceleration to the downside if sellers can take out .7359. This is a potential trigger point for a steep break into .7318.