AUD/USD Forex Technical Analysis – Early Breakout Over .6941 Puts .7048 – .7099 on Radar

The Australian Dollar advanced against the U.S. Dollar on Friday amid rising risk appetite, as soothing comments from Federal Reserve Chairman Jerome Powell helped ease concerns about more aggressive interest rate hikes to contain inflation.

On Friday, the AUD/USD settled at .6938, up 0.0084 or 1.23%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) finished at $68.59, up $0.67 or +0.98%.

In an interview with Marketplace on Thursday, Powell reiterated that the central bank is prepared to raise interest rates by a half point at the coming meetings in June and July. Additionally, the Fed chief stressed that a 75 basis point increase was not in the cards.

Powell also acknowledged that the central bank is “prepared to do less,” if factors come in better than expected. The Fed’s goal is to get inflation back down to 2 percent without falling into a recession, Powell added.

Daily Swing Chart Technical Analysis

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

The minor trend is also down. A trade through .7053 will change the minor trend to up. This will shift momentum to the upside.

The AUD/USD also posted an inside move on Friday which tends to suggest investor indecision and impending volatility. It could also be indicating a transition from bearish to short-term bullish.

The minor range is .7053 to .6829. Its 50% level or pivot at .6941 is resistance. It stopped the rally on Friday.

The second minor range is .7266 to .6829. Its retracement zone at .7048 to .7099 is the next resistance area.

Daily Swing Chart Technical Forecast

Trader reaction to .6941 is likely to determined the direction of the AUD/USD early Monday.

Bullish Scenario

A sustained move over .6941 will indicate the presence of buyers. If this is able to generate enough upside momentum then look for the buying to possibly accelerate into a resistance cluster at .7048 – .7053. Following this cluster is Fibonacci resistance at .7099.

Bearish Scenario

A sustained move under .6941 will signal the presence of sellers. This could create the negative momentum needed to challenge last week’s low at .6829, followed by a pair of main bottoms from June 2020 at .6811 and .6777.