AUD/USD Forex Technical Analysis – Firms as US Rate Hike Expectations Soften

The Australian Dollar is surging against the U.S. Dollar late Friday afternoon as investors reduced their expectations on Federal Reserve rate hikes amid indications of a slowdown in economic growth.

The move was essentially sparked by data from Thursday, showing that U.S. business activity slowed considerably in June. Investors are now saying they are expecting the Fed to lower the size of rate hikes after another 75 basis point rate increase in July.

At 18:21 GMT, the AUD/USD is trading .6949, up 0.0056 or +0.81%. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) is at $68.73, up $0.40 or +0.58%.

Late in the session on Friday, U.S. rate futures priced in a 73% probability of a 75 basis-point increase at the July meeting. For September the market has factored in a 50-bps rise.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the nearest main bottom at .6869 will signal a resumption of the downtrend. A move through .6851 will reaffirm the downtrend. Taking out .7069 will change the main trend to up.

The minor range is .6851 to .7069. Its 50% level at .6960 is potential resistance. The short-term range is .7283 to .6851. Its 50% level at .7067 is another potential resistance level.

Daily Swing Chart Technical Forecast

Trader reaction to the pivot at .6960 is likely to determine the direction of the AUD/USD into the close on Friday.

Bearish Scenario

A sustained move under .6960 will indicate the presence of sellers. The first downside target is a minor pivot at .6913. If this fails then look for a late session break into the main bottom at .6869.

Bullish Scenario

A sustained move over .6960 will signal the presence of buyers. This could trigger a quick surge into a pivot at .6969. This is a potential trigger point for an acceleration into the resistance cluster at .7067 – .7069.