AUD/USD Forex Technical Analysis – Near-Term Target .6685, but Vulnerable to Minor Reversal Top

The risk-sensitive Australian Dollar continues to grind higher on Wednesday, keeping it on track toward a sixth straight session of gains, and the currency’s best month in four years. Despite the gloom over coronavirus deaths, traders have almost solely focused on the positives over the past week, as seen in the performance of the Aussie.

At 08:38 GMT, the AUD/USD is trading .6529, up 0.0036 or +0.55%.

As Australia moves cautiously toward reopening its economies, the Aussie has soared – rising some 6% on the month and 18% from March’s 17%-year low. The rally has been impressive enough to cause the National Australia Bank (NAB) to revise its year-end forecast for the Aussie to .6750, although it still expects a possible pullback to .6200 at the send of the current quarter.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. This trend was reaffirmed earlier today. If the upside momentum continues then look for a possible test of the March 9 main top at .6685.

The main trend will change to down on a trade through .6254. This is highly unlikely today, but due to the prolonged rally from April 21, traders should start watching for a closing price reversal top. This chart pattern won’t change the trend to down, but if confirmed, it could lead to a 2 to 3 day pullback. Today’s Federal Reserve monetary policy decisions could help put in a short-term top later in the day at 18:00 GMT.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .6529, trader reaction to yesterday’s close at .6493 is likely to set the tone.

Bullish Scenario

A sustained move over .6493 will indicate the buying is getting stronger. If buyers continue to generate enough upside momentum then look for the rally to possibly extend into the March 9 top at .6685.

Bearish Scenario

A sustained move under .6493 will indicate the selling is greater than the buying at current price levels. If confirmed, this could trigger the start of a 2 to 3 day correction.

Side Notes

Look for volatility with the release of the Fed monetary policy statement at 18:00 GMT and Fed Chairman Jerome Powell’s press conference at 18:30 GMT. Investors will be looking to see if the U.S. central bank or Powell gives any clues on its future policy path.

Ahead of the day, there are no expectations the Fed will change policy. However, it could show something in its economic forecast, or at least qualitatively how deep and how long the economic downturn will go on.