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James Hyerczyk

The Australian Dollar finished higher on Friday, underpinned by demand for higher risk assets as investors continued to monitor the progress in U.S. stimulus talks, hoping for a new deal by the November 3 presidential election.

In other news, the start of the fourth quarter saw the recovery of the Australian economy strengthened as business activity picked up solidly amid a further loosening of social distancing curbs, notably in the services sector.

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On Friday, the AUD/USD settled at .7136, up 0.0019 or +0.27%.

Despite the strength in the Aussie the last three days, buyers remained cautious ahead of the November 3 Reserve Bank of Australia (RBA) policy meeting with analysts calling for a rate cut from 0.25% to 0.10%. Policymakers are also looking for the announcement of more aggressive bond-buying as the economy still recovers from the damage caused by the pandemic.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7243 will change the main trend to up. A move through .7021 will signal a resumption of the downtrend.

The major support is the longer-term retracement zone at .7095 to .7020. This zone stopped the selling at .7021 on October 20.

The minor range is .7243 to .7021. The AUD/USD is currently testing its retracement zone at .7132 to .7158. This zone is controlling the near-term direction. Aggressive counter-trend buyers are going to try to drive the Forex pair through this zone, while sellers are going to try to form a secondary lower top.

The short-term range is .7414 to .7006. If the short-covering rally continues then look for the rally to possibly extend into its retracement zone at .7210 to .7258.


Short-Term Outlook

Friday’s price action suggests the near-term direction of the AUD/USD will be determined by trader reaction to .7132 to .7158.

Bullish Scenario

A sustained move over .7158 will indicate the presence of counter-trend buyers. The daily chart indicates that this move could trigger an acceleration to the upside with .7210 the next likely upside target.

Bearish Scenario

A sustained move under .7132 will signal the return of sellers. This could trigger a retest of .7095 to .7020.

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

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