James Hyerczyk
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The Australian Dollar is testing its lowest level against the U.S. Dollar since May 4 on Thursday after the greenback was boosted by expectations of earlier-than-expected policy tightening by the Federal Reserve in response to a spike in consumer inflation.

U.S. consumer prices increased by the most in nearly 12 years as April as booming demand amid a reopening economy pushed against supply constraints, data showed on Wednesday.

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At 08:59 GMT, the AUD/USD is trading .7704, down 0.0023 or -0.30%.

Traders will now get the chance to react to U.S. weekly jobless claims data due out at 12:30 GMT and retail sales numbers on Friday to determine whether consumer prices will continue to rise.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of a closing price reversal top on May 10.

A trade through .7675 will change the main trend to down. A move through .7891 will negate the closing price reversal top and signal a resumption of the uptrend.

The main range is .8007 to .7532. The AUD/USD is currently trading on the weak side of its retracement zone at .7770 to .7826. This is contributing to the downside bias. The zone is now resistance.

The short-term range is .7532 to .7891. Its retracement zone at .7112 to .7669 is currently being tested. Since the main trend is up, buyers could come in on a test of this area, but look out to the downside if .7669 fails as support.


Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to the short-term 50% level at .7112.

Bullish Scenario

A sustained move over .7712 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for the rally to possibly extend into the main 50% level at .7770.

Bearish Scenario

A sustained move under .7711 will signal the presence of sellers. If this move continues to generate enough downside momentum then look for a break into the main bottom at .7675, followed by the short-term Fibonacci level at .7669.

The trend will change to down on a trade through .7675, but we could still see a technical bounce on the first test of .7669.

Taking out .7669 could trigger an acceleration to the downside. The daily chart indicates there is plenty of room to the downside with the next major target a main bottom at .7586, followed by another main bottom at .7532.

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