AUD/USD Forex Technical Analysis – Could Strengthen Over 1.2202, Weaken Under 1.2166 but Volume is a Concern

Riskier currencies like the Australian Dollar rose on Wednesday, supported by a weaker U.S. Dollar. The Aussie was also boosted by signs that a small COVID-19 outbreak in Sydney would be contained.

Comments from President-elect Joe Biden late Tuesday may have helped underpin the higher-yielding currency early in the session. Biden said he will push for a third round of stimulus checks in the next COVID-19 relief bill.

On Wednesday, the AUD/USD settled at .7578, up 0.0052 or +0.69%.

The former vice president said at an event in Wilmington, Delaware, that his plan will call for direct payments to Americans, but declined to specify how large they would be, calling that a matter for negotiations.

Another round of fiscal stimulus early next year would put further pressure on the U.S. Dollar, while lifting demand for higher yielding currencies like the Australian Dollar.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.2273 will signal a resumption of the uptrend, while a move through 1.2059 will change the main trend to down.

The minor trend is also up. A trade through 1.2130 will change the minor trend to down. This will also shift momentum to the downside.

The first minor range is 1.2273 to 1.2130. Its pivot at 1.2202 is acting like resistance.

The second minor range is 1.2059 to 1.2273. Its 50% level at 1.2166 provided support on Wednesday.

The intermediate range is 1.1800 to 1.2273. If 1.2130 fails as support then look for a possible acceleration into its 50% level at 1.2037.

Short-Term Outlook

The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to the 50% levels at 1.2202 and 1.2166. However, due to the thin volume, buying strength or selling weakness could be a risky proposition because of the possibility of a “whip-saw”.

Volume is expected to be extremely light on Thursday and Friday due to a two-day bank holiday. Furthermore, most of the major players have headed to the sidelines and may not return until the New Year.