AUD/USD Forex Technical Analysis – Early Selling Pressure Could Trigger Break into .7316, Followed by .7290

The Australian Dollar edged lower against the U.S. Dollar on Thursday after data showed U.S. producer prices posted their largest annual increase in more than a decade in the 12 months through July, suggesting inflation pressures remain strong. Additionally, data showed the number of Americans filing claims for unemployment benefits fell again last week as the economic recovery from the COVID-19 pandemic continued.

At 20:22 GMT, the AUD/USD is trading .7337, down 0.0036 or -0.49%.

U.S. producer prices increased more than expected in July, a Labor Department report showed on Thursday, suggesting inflation could remain high as strong demand fueled by the recovery continues to hurt supply chains.

The producer price index (PPI) for final demand increased 1.0% last month after rising 1.0% in June. In the months through July, the PPI jumped 7.8%, a record high since the measure was introduced just over a decade ago.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7316 will be a sign of weakness. A move through .7290 will reaffirm the downtrend. Taking out .7427 will change the main trend to up.

The short-term range is .7290 to .7427. Its retracement zone at .7359 to .7375 is resistance. This is followed by the long-term Fibonacci level at .7379 and another short-term retracement zone at .7397 to .7422.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD early Friday is likely to be determined by trader reaction to .7359.

Bearish Scenario

A sustained move under .7359 will indicate the presence of sellers. The first downside target is the minor bottom at .7316. Takin gout this level could trigger a further break into the main bottom at .7290.

Bullish Scenario

A sustained move over .7359 will signal the return of buyers. This could lead to a labored rally with potential resistance lined up at .7379, .7397 and .7422. We don’t think the market is capable of breaking out to the upside until buyers can take out .7427 with strong volume.