James Hyerczyk
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Surging U.S. Treasury yields, a tumultuous stock market and dovish commentary from a high-ranking Reserve Bank of Australia official helped drive the Australian Dollar to a six-week low last week. The Forex pair is now sitting slightly above last year’s close after turning lower for the year earlier in the week.

For the week, the AUD/USD settled at .7809, down 0.0110 or -1.39%.

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Weekly Technical Analysis

The main trend is up according to the weekly swing chart. However, momentum has been trending lower since the week-ending January 26. The uptrend will be reaffirmed on a move through .8135. The trend will change to down on a trade through .7501.

The main range is .7501 to .8135. Its retracement zone at .7818 to .7743 is currently being tested. Trader reaction to this zone will determine the near-term direction of the market. Overcoming .7818 will fuel a short-covering rally while breaking through .7743 will lead to increased downside momentum.


Weekly Technical Forecast

Based on last week’s close at .7809, the direction of the AUD/USD this week will be determined by trader reaction to the 50% level at .7818.

A sustained move over .7818 will signal the presence of buyers. This could generate the upside momentum needed to challenge a potential resistance cluster at .7895 to .7901.

A sustained move under .7818 will indicate the presence of sellers. This could drive the AUD/USD into the Fibonacci level at .7743. This is a potential trigger point for an acceleration into the nearest uptrending Gann angle at .7701.

If U.S. Treasury yields ease or global equity markets stabilize then the AUD/USD could pop over .7818. Similar conditions to last week in these two markets could lead to further downside pressure.

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