AUD/USD Reaction to .7261 – .7331 Sets Near-Term Direction

The commodity-linked Australian Dollar strengthened on Wednesday as the impact of an escalating conflict in Ukraine kept prices surging for oil and other raw materials.

Crude oil futures surged above $110 a barrel, and wheat and aluminum prices jumped, with Western sanctions on Russia over its invasion of Ukraine seen disrupting commodities exports.

At 02:58 GMT, the AUD/USD is trading .7292, down 0.0005 or -0.07%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $72.37, up 0.42 or +0.59%.

Meanwhile, the U.S. Federal Reserve will move forward with plans to raise interest rates this month to try to tame inflation, even as the outbreak of war in Ukraine has made the outlook “highly uncertain,” Fed Chair Jerome Powell said on Wednesday.

Early Thursday, a report showed Australian Building Approvals fell 27.9%, much worse than the -2.9% forecast. The previous month was revised higher to 9.8%. The Trade Balance came in at 12.89 Billion, better-than-the-minus 9.00 Billion forecast. The previous month was revised higher to 8.82 Billion.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the main top at .7314 will reaffirm the uptrend. A move through .7086 will change the main trend to down.

The main range is .7556 to .6967. The AUD/USD is currently trading inside its retracement zone at .7261 to .7331. This zone is controlling the longer-term direction of the Forex pair.

The minor range is .7095 to .7307. Its retracement zone at .7201 to .7176 is the nearest support area.

The short-term range is .6967 to .7307. Its retracement zone at .7137 to .7097 is the area protecting the downside.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to .7297.

Bullish Scenario

A sustained move over .7297 will indicate the presence of buyers. They could, however, run into some resistance with .7307, .7314 and .7331 potential targets. The Fibonacci level at .7331 is also a potential trigger point for an acceleration to the upside with the November 9, 2021 main top at .7431 the next major target.

Bearish Scenario

A sustained move under .7297 will signal the presence of sellers. The first target is the main 50% level at .7261. This is also a potential trigger point for an acceleration to the downside with the minor retracement zone at .7201 – .7137 the next likely target area.