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James Hyerczyk
AUD/USD

The Australian Dollar is edging higher on Friday as the U.S. Dollar hovers just below its recent two-month high. A slight increase in demand for risk is helping to boost the Aussie with some of those gains fueled by hopes that U.S. fiscal stimulus talks would resume.

Although the Australian Dollar is higher on Friday, it’s still on track to post its worst week against the dollar since March. Most of those loses are being attributed to expectations of a rate cut by the Reserve Bank of Australia (RBA) at its October 6 meeting. Policymakers are expected to trim its benchmark rate from 0.25 percent to 0.10%.

At 08:40 GMT, the AUD/USD is trading .7071, up 0.0025 or +0.35%.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7016 will reaffirm the downtrend. The main trend will change to up on a trade through .7345. This is highly unlikely but after seven days down, there is room for a counter-trend retracement.

The minor trend is also down. A new minor bottom was formed at .7016. Taking out this level will mean the selling pressure is increasing.

The short-term range is .6777 to .7414. The AUD/USD is currently straddling its retracement zone at .7096 to .7020. Trader reaction to this zone is likely to determine the near-term direction of the AUD/USD.

The new minor range is .7345 to .7016. Its 50% level at .7181 is a potential upside target.

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Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD on Friday is likely to be determined by trader reaction to the short-term 50% level at .7096.

Bullish Scenario

A sustained move over .7096 will indicate the presence of buyers. If this move creates enough upside momentum then we could see an eventual counter-trend rally into the minor 50% level at .7181.

Bearish Scenario

The inability to overcome .7096 will be the first sign of weakness. Taking out the Fib level at .7020 will signal the presence of sellers. A move through .7016 will signal a resumption of the downtrend. This could also trigger an acceleration to the downside since the daily chart indicates the nearest support area is .6833 to .6777.

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

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