AUD/USD Forex Technical Analysis – Getting Ready to Test Retracement Zone at .7135 – .7101
The Australian Dollar is inching lower on Friday shortly before the release of the U.S. Non-Farm Payrolls report at 13:30 GMT. The greenback is also in a position to post its best week against the Aussie in more than a month.
The Aussie has been under pressure most of the week as investors shed riskier assets in reaction to a sharp rise in U.S. Treasury yields after the Federal Reserve meeting minutes revealed central bankers were planning to begin reducing its balance sheet soon after it finishes tapering stimulus and makes its first interest rate hike.
At 11:30 GMT, the AUD/USD is trading .7155, down 0.0008 or -0.11%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $71.04, down $0.60 or -0.84%.
The December Non-Farm Payrolls report is due to be released at 13:30 GMT on Friday. Economists are expecting the economy to have added 422,000 jobs in December, according to estimates compiled by Dow Jones. The unemployment rate is expected to come in at 4.1%.
A stronger than expected Non-Farm Payrolls number should be bearish for the AUD/USD because it will solidify the chances of a March interest rate hike by the Federal Reserve. However, some traders are saying the news has already been priced into the market. This could lead to a limited reaction or even a short-covering rally due to profit-taking.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through .7277 will signal a resumption of the downtrend. A move through .7083 will change the main trend to down.
The minor trend is down. This is controlling the momentum.
On the upside, the nearest resistance is a pair of 50% levels at .7182 and .7212. The major resistance zone controlling the near-term direction of the AUD/USD is the retracement zone at .7275 to .7341.
The short-term range is .6993 to .7277. Its retracement zone at .7135 to .7101 is the next downside target area. Since the main trend is up, buyers could step in on a test of this zone. However, a sustained move under .7101 could trigger the start of an acceleration to the downside.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Friday is likely to be determined by trader reaction to .7135 and .7182.
A sustained move under .7135 will indicate the presence of sellers. This could trigger a quick break into .7101. Taking out this level will lead to a test of main bottom at .7083. A move through this level will change the main trend to down. This could trigger an acceleration into the support cluster at .6993 – .6991.
A sustained move over .7182 will signal the presence of buyers. This could trigger a surge into .7212. Overtaking this level could trigger an acceleration to the upside with the resistance cluster at .7275 – .7277 the next target.