AUD/USD Forex Technical Analysis – Counter-Trend Buyers Targeting .7144 – .7218 Retracement Zone

The Australian Dollar is inching higher early Friday, helped by a weaker U.S. Dollar and steady demand for riskier assets. Surprisingly strong retail sales also underpinned the Aussie.

At 01:56 GMT, the AUD/USD is trading .7133, up 0.0033 or +0.47%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $70.20, up $0.02 or +0.03%.

Australian retail sales climbed to record highs in April as consumers spent big for the holidays, though surging inflation and rising interest rates are steadily sapping spending power.

Data from the Australian Bureau of Statistics (ABS) on Friday showed retail sales rose 0.9% in April to a record A$33.9 billion ($24.09 billion), matching analyst forecasts.

Sales were up a heady 9.6% on a year earlier, supporting policy makers’ hopes that households will dip into savings to keep consuming even as real incomes go backwards, Reuters reported.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. The main trend will change to up on a move through .7266. A trade through .6829 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through .7136 will reaffirm the trend. A move through .7035 will change the minor trend to down.

The short-term range is .7266 to .6829. The AUD/USD is currently trading on the strong side of its retracement zone at .7099 to .7047, making it support.

The intermediate range is .7458 to .6829. Its retracement zone at .7144 to .7218 is the next target area.

The main range is .7661 to .6829. Its retracement zone at .7245 to .7343 is the primary upside target.

Daily Swing Chart Technical Forecast

Trader reaction to .7099 will determine the direction of the AUD/USD early Friday.

Bullish Scenario

A sustained move over .7099 will indicate the presence of buyers. This could trigger a surge into .7144.

Look for sellers on the first test of .7144. Overtaking this level, however, could trigger a short-term acceleration into the Fibonacci level at .7218.

Bearish Scenario

A sustained move under .7099 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to continue into the short-term 50% level at .7047, followed by the minor bottom at .7035.

A trade through .7035 will shift momentum to down and could trigger an acceleration to the downside.