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James Hyerczyk
AUD/USD Australian Dollar

The Australian Dollar closed slightly lower on Friday as the currency rebounded from an earlier test of the low of the year as news of slower U.S. payrolls growth in July fueled expectations that the Federal Reserve would cut interest rates again in September. Gains were likely capped by heightened U.S.-China trade tensions that drove down demand for commodity-linked currencies.

On Friday, the AUD/USD settled at .6801, down 0.0001 or 0.02%. This was up from an intraday low of .6763. The previous low of the year was .6764, hit on July 3, 2019.

Daily AUD/USD Swing Chart

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6763 will signal a resumption of the downtrend. The daily chart is wide open under this level with the next major bottom the March 3, 2009 main bottom at .6285. This is followed by the February 2, 2009 main bottom at .6247. The November 20, 2008 main bottom at .6074 and the October 27, 2008 main bottom at .6008.

Friday’s price action suggests that aggressive counter-trend buyers were trying to form a closing price reversal bottom, but fell short at the close. This doesn’t mean the trend is getting ready to turn to up, but there is the possibility of a short-term shift in momentum to the upside.

The current short-term range is .7082 to .6763. If the market is able to generate enough upside momentum over the near-term, we could see an eventual rally into its retracement zone at .6923 to .6960.


Daily Swing Chart Technical Forecast

The offsetting fundamentals are making a forecast difficult. Furthermore, the hedge funds are net short and looking for more downside especially since there is no real support under .6764 until .6285 to .6008.

On the bearish side, the Reserve Bank of Australia (RBA) is expected to cut rates in October, however, before that, the Federal Reserve is widely expected to cut rates again in September. Additionally, the new tariffs on China are expected to kick in on September and traders are still waiting for countermeasures by China.

The first sign that the selling is getting weaker will be a move through .6819. This will make .6763 a new minor bottom. This move will not necessarily mean that new buyers are driving the price action. In fact, we anticipate that there are a lot of shorts that have to be cleared out before real buyers will emerge.

We’re looking to play momentum on Monday with an upside bias expected to form on a sustained move over .6819 and the downside bias to continue on a sustained move under .6763.

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