AUD/USD Forex Technical Analysis – Trader Reaction to Minor Pivot at .7457 Sets the Tone
The Australian Dollar is trading lower on Thursday as worries over lockdowns and signs of an economic slowdown in China outweighed better-than-expected Australian labor market data.
In recent weeks, new virus outbreaks, a chaotic vaccine rollout and a tightening of already strict curbs on international travel have reignited threats to the country’s economic revival.
In China, Australia’s largest trading partner, the economy grew slightly more slowly than expected in the second quarter, weighed down by higher raw material costs and new COVID-19 outbreaks, as expectations build that policymakers may have to do more to support the recovery.
At 11:21 GMT, the AUD/USD is trading .7749, down 0.0035 or -0.46%.
In other news, better than expected labor market data in Australia garnered little response from traders. Australia’s jobless rate, led by the country’s remarkable recovery from the coronavirus pandemic, improved to a level last seen during the once-in-a-generation mining boom and may help bring forward the date of monetary policy tightening.
Thursday’s data from the Australian Bureau of Statistics (ABS) showed 29,000 net new jobs were created in June, in-line with forecasts for a 30,000 gain and on top of 115,100 in May. The increase was entirely led by full-time jobs, which jumped by 51,600.
Unemployment dropped to 4.9%, the lowest since December 2010, when a mining investment boom that ended in 2013 was powering Australia’s economy.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum has been trending higher since the formation of the closing price reversal bottom on July 9.
A trade through .7410 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a trade through .7599.
The minor trend is also down. A trade through .7503 will change the minor trend to up. This will confirm the shift in momentum.
The AUD/USD is currently trading inside a major retracement zone at .7499 to .7379. This zone is controlling the longer-term direction of the Forex pair. Inside this range is the minor 50% level or pivot at .7457.
The short-term range is .7599 to .7410. Its retracement zone at .7505 to .7527 is resistance.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to .7457.
A sustained move under .7456 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into .7410. If this fails then look for a test of .7379.
A sustained move over .7457 will signal the presence of buyers. This could trigger a surge into a cluster of resistance levels at .7499, .7503, .7505 and .7527. The latter is a potential trigger point for an acceleration into .7593 to .7599.