AUD/USD Forex Technical Analysis – Lower for Fourth Straight Session as Hawkish Fed Remarks Weigh

The Australian Dollar is down early in the session on Monday, retreating for a fourth straight session since hitting a two-month high early last week. Today’s move is being fueled by a stronger U.S. Dollar. Lower demand for riskier assets is another reason the commodity-linked currency is weaker.

At 02:10 GMT, the AUD/USD is trading .6650, down 0.0028 or -0.42%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $65.95, down $0.23 or -0.35%.

The Aussie is being pressured by its U.S. counterpart as investors eyed rising U.S. bond yields, while continuing to make bets on the U.S. Federal Reserve’s interest rate hiking path.

Downside Momentum Fueled by Hawkish Fed Members

The U.S. currency picked up steam against the Australian Dollar last week as investors reacted to hawkish policymaker comments with St. Louis Fed President James Bullard saying that even under a “generous” analysis of monetary policy, the Fed needs to keep raising rates as its tightening so far “had only limited effects on observed inflation.”

Bullard’s comments were essentially reiterated by other policymakers, helping to suppress speculation that the Fed was nearing a pivot in its tightening policy.

Strong Australia Jobs Data Boosts Case for More Rate Hikes

While investors were digesting the hawkish Fed comments, Australia was releasing stronger-than-expected labor market data. The broad strength of Australia’s jobless rate quashed chatter that the Reserve Bank of Australia (RBA) might pause its policy tightening in December, with markets now almost fully-priced for another quarter point hike to 3.10%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6798 will signal a resumption of the uptrend. A move through .6386 will change the main trend to down.

On the upside, the major resistance is a long-term 50% level at .6702. On the downside, the nearest support is a Fibonacci level at .6631, followed by a 50 level at .6543.

Daily Swing Chart Technical Forecast

Trader reaction to .6631 is likely to determine the direction of the AUD/USD on Monday.

Bullish Scenario

A sustained move over .6631 will indicate the presence of buyers. If this level is able to generate enough near-term upside momentum then look for a retest of the 50% level at .6760, followed by the minor top at .6798.

Bearish Scenario

A sustained move under .6631 will signal the presence of sellers. This could trigger a near-term acceleration into the 50% level at .6543.