AUD/USD Forex Technical Analysis – Testing Retracement Zone; Strengthens Over .7826, Weakens Under .7769

The Australian Dollar is inching lower on Thursday after earlier gains were driven by a dovish Federal Reserve. Fed Chairman Jerome Powell did the dollar no favors on Wednesday by quashing speculation about an early tapering of asset buying, saying employment was still far short of target.

At 06:49 GMT, the AUD/USD is trading .7783, down 0.0010 or -0.12%. This is down from an intraday high of .7818.

The price action suggests investors now believe the risk is the Fed will be too cautious in delaying the first steps to normalizing policy.

“Low interest rates amid an improving U.S. and global economy is a recipe for the dollar to continue decreasing,” said Joseph Capurso, head of international economic at CBA.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out the previous main top at .7816. A trade through the intraday high at .7818 will signal a resumption of the uptrend. The main trend will change to down on a move through .7691.

The minor trend is also up. A trade through .7725 will change the minor trend to down. This will shift momentum to the downside.

The main range is .8007 to .7532. The AUD/USD is currently trading inside its retracement zone at .7769 to .7826. This zone is controlling the near-term direction of the Forex pair.

The short-term range is .7532 to .7818. If the main trend changes to down then its retracement zone at .7675 to .7641 will become the primary downside target.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday will be determined by trader reaction to .7793.

Bullish Scenario

A sustained move over .7793 will indicate the presence of buyers. The first upside target is the intraday high at .7818. This is followed by the main Fibonacci level at .7826. Taking out this level will indicate the buying is getting stronger. This could extend the rally into the main top at .7849.

A move through .7849 will reaffirm the uptrend. The daily chart indicates there is plenty of room to the upside. This could trigger an acceleration to the upside with .8007 the next major target.

Bearish Scenario

A sustained move under .7793 will signal the presence of sellers. The first downside target is the main 50% level at .7769. Taking out this level will indicate the selling pressure is getting stronger. This could trigger a further break into the minor bottom at .7725.

Side Notes

A close under .7793 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.