James Hyerczyk
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The Australian Dollar extended losses on Thursday after the U.S. Federal Reserve surprised markets by signaling it would raise interest rates and end emergency bond-buying sooner than expected. Meanwhile, earlier in the week, the Reserve Bank (RBA) minutes presented a dovish front. The divergence between central bank policies favors the U.S. Dollar.

At 19:40 GMT, the AUD/USD is trading .7549, down 0.0061 or -0.80%.

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With global equity markets in the red, the Australian Dollar – seen as a proxy for risk appetite, is currently trading at its lowest level on April 1.

In other news, traders showed little reaction to Australia’s upbeat data, with job creation beating expectations in May and unemployment diving to pre-pandemic lows.

Such strength will challenge the Reserve Bank of Australia’s (RBA) position that a rate hike will not come until 2024, a stance reaffirmed by RBA Governor Philip Lowe on Thursday.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart.  A trade through the April 1 main bottom at .7532 will reaffirm the downtrend. A move through .7776 will change the main trend to up.

The main range is .6991 to .8007. Its retracement zone at .7499 to .7379 is the next major downside target. Buyers could come in on a test of this area.

The short-term range is .7532 to .7891. Its retracement zone at .7669 to .7712 is potential resistance.


Daily Swing Chart Technical Forecast

Taking out .7532 will reaffirm the downtrend and signal the selling pressure is getting stronger. This should trigger a further break into the long-term 50% level at .7499. Sellers could start lightening up on a test of this level.

If .7499 fails as support then look for the selling to possibly extend into the December 21 main bottom at .7462. This is a potential trigger point for an acceleration to the downside with the long-term Fibonacci level at .7379 another potential target.

The near-term direction of the AUD/USD is likely to be determined by trader reaction to the long-term retracement zone at .7499 to .7379.

For a look at all of today’s economic events, check out our economic calendar.
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