AUD/USD Forex Technical Analysis – Sustained Move Under .7143 Puts .7029 on Radar

The Australian Dollar is edging lower on Thursday after posting a potentially bearish closing price reversal top the previous session. Weighing on the risk-sensitive Aussie are fears of out of control inflation and slower economic growth. Investors are also reacting to comments from JPMorgan CEO Jamie Dimon, warning of an economic “hurricane.”

At 06:14 GMT, the AUD/USD is trading .7159, down 0.0016 or -0.22%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $71.22, up $0.14 or +0.19%.

The Aussie is also being pressured by rising U.S. Treasury yields, which hit two-week peaks overnight. The U.S. benchmark 10-year yield rose to 2.951% on Wednesday after data showed U.S. manufacturing activity had picked up in May as demand for goods remained strong, which could allay fears of an imminent recession.

Jamie Dimon Warns of ‘Economic Hurricane’

Australian Dollar investors are taking notice of potentially bearish remarks from JPMorgan Chase CEO Jamie Dimon, who said on Wednesday he is preparing the biggest U.S. bank for an economic hurricane on the horizon and advised investors to do the same.

“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” Dimon said. “That hurricane is right out there, down the road, coming our way.”

Traders Bracing for US Economic Data

On Thursday, the focus will shift to U.S. economic reports, especially ADP Non-Farm Employment Change data. It is expected to show the private sector of the economy added 210K jobs in May, matching the previous month. Other job-related reports include Challenger Job Cuts and Weekly Unemployment Change.

The Fed is trying to slow down inflation without harming the solid labor market. These three reports will offer insight as to whether the jobs market is holding steady, or if it is weakening. This could have an impact on interest rates, the U.S. Dollar and how aggressive the Fed can be with monetary policy in the near future.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7266 will change the main trend to up. A move through .6829 will signal a resumption of the downtrend.

The minor trend is up, but the confirmation of yesterday’s closing price reversal top, shifted momentum to the downside. A trade through .7230 will negate the closing price reversal top. A move through .7035 will change the minor trend to down. This will confirm the shift in momentum.

The main range is .7661 to .6829. Its retracement zone at .7245 to .7343 is resistance.

The intermediate range is .7458 to .6829. The AUD/USD is currently testing its retracement zone at .7143 to .7218.

The short-term range is .6829 to .7230. Its retracement zone at .7029 to .6982 is the next downside target.

Daily Swing Chart Technical Forecast

Trader reaction to .7143 is likely to determine the direction of the AUD/USD on Thursday.

Bearish Scenario

A sustained move under .7143 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the support cluster at .7035 – .7029.

Bullish Scenario

A sustained move over .7143 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the resistance cluster at .7218 to .7245. This area stopped the rally on Wednesday at .7230.