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James Hyerczyk
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AUD/USD

After weeks of treading water while trapped inside a pair of retracement zones, the Australian Dollar appears to be finally ready to breakout above resistance as investors shrugged off a high U.S. inflation number, putting the U.S. Dollar under pressure.

At 06:32 GMT, the AUD/USD is trading .7762, up 0.0010 or +0.12%.

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On Thursday, the U.S. government showed consumer prices up 5% year-on-year, the sharpest rise in more than a dozen years and core inflation surging 0.7% in a month. But hefty contributions from short-term rises in airline ticket prices and used cars helped convince traders it was not going to drive interest rates higher any time soon.

Economists also believe that rising inflation could be temporary since the increases were largely centered in areas impacted by the pandemic.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7774 will change the main trend to up. A move through .7646 will signal a resumption of the downtrend.

The minor trend is also down. The minor trend will change to up on a move through .7766. A trade through the minor bottom at .7718 will be a sign of weakness.

The short-term range is .7532 to .7891. Its retracement zone at .7711 to .7669 is support.

The main range is .8007 to .7532. Its retracement zone at .7770 to .7826 is resistance, but also the trigger point for an acceleration to the upside.

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Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Friday is likely to be determined by trader reaction to the long-term 50% level at .7770.

Bullish Scenario

A sustained move over .7770 will indicate the presence of buyers. This could trigger the start of a strong rally with .7826 the primary upside target. Before the AUD/USD can reach this level, however, the buying is going to have to be strong enough to take out three main tops at .7774, .7796 and .7814.

Bearish Scenario

A sustained move under .7770 will signal the presence of sellers. This could trigger a pullback into yesterday’s low at .7718, followed by the main 50% level at .7711. Look for a technical bounce on the first test of the level, but if it fails then look for the selling to possibly extend into .7669.

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