AUDUSD Forecast – Spikes to Nearly 3-Month High as Powell Signals Rate Hike Slowdown

The Australian Dollar soared on Wednesday, hitting its highest level since September 13 after U.S. Federal Reserve Chair Jerome Powell reiterated that the central bank would moderate the pace of rate increases as soon as December.

On Wednesday, the AUDUSD settled at .6788, up 0.0099 or +1.48%. The Invesco CurrencyShares Australian Dollar Trust (FXA) finished at $67.21, up $10.20 or +1.54%.

Powell struck a less-hawkish tone than expected and stressed that a slowdown in the pace of rate hikes would be appropriate at the Federal Open Market Committee meeting on December 13-14.

“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said in a speech at the Brookings Institution in Washington.

“Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level,” Powell noted.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Wednesday when buyers took out a pair of main tops at .6781 and .6798. A trade through .6641 will change the main trend to down.

The AUDUSD also closed on the strong side of its major 50% level at .6760, making it support. The next support is at .6631. On the upside, the target price is the Sept. 13 main top at .6916.

Daily Swing Chart Technical Forecast

Trader reaction to the major 50% level at .6760 is likely to determine the direction of the AUDUSD on Thursday.

Bullish Scenario

A sustained move over .6761 will indicate the presence of buyers. Taking out Wednesday high at .6836 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with .6916 the next major target.

Bearish Scenario

A sustained move under .6760 will signal the presence of sellers. If this creates enough downside momentum then look for a pullback into the minor pivot at .6738, followed by the Fibonacci level at .6631.

Side Notes

We’re looking for heightened volatility once again on Thursday with the U.S. releasing key economic data on inflation and consumer spending. These reports could set the tone ahead of Friday’s U.S. Non-Farm Payrolls report.