AUDUSD Forecast – Trader Indecision Fueled by Fed Policy Concerns, Recession Worries
The Australian Dollar is inching lower on Thursday after steady trade balance data showed the country’s massive commodity export business weakened slightly while sluggish domestic demand pulled imports a touch lower.
The country’s trade balance ended October at a surplus of A$12.22 billion, coming slightly above expectations of A$12.10 billion, but falling below the prior month’s reading of A$12.44 billion.
Both exports and imports remained largely steady in October, data from the Australian Bureau of Statistics (ABS) showed, with both metrics falling less than 1% during the month.
At 06:25 GMT, the AUDUSD is at .6719, down 0.0007 or -0.10%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $66.54, up $0.33 or +0.50%.
Aussie Traders Eyeing Federal Reserve Policy
The Australian Dollar posted a strong reversal to the upside on Wednesday as investors weighed the outlook for Federal Reserve policy amid simmering fears that high interest rates could spur a recession.
While AUDUSD investors have been anticipating the Fed will soon slow its tightening pace, recent upbeat U.S. employment, services and factory data have added to investor uncertainty over the policy outlook.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, momentum has shifted to the downside.
A trade through .6851 will signal a resumption of the uptrend. A move through .6641 will change the main trend to down.
The AUDUSD is currently trading inside a major, long-term retracement zone at .6760 to .6466.
A short-term retracement zone comes in at .6718 to .6687. The intermediate retracement zone is .6618 to .6563.
Daily Swing Chart Technical Forecast
Trader reaction to the short-term retracement zone at .6718 to .6687 is likely to determine the direction of the AUDUSD on Thursday.
A sustained move over .6718 will indicate the presence of buyers. The first upside target is the long-term 50% level at .6760. Overtaking this level will put the Forex pair in a bullish position.
A sustained move under .6687 will signal the presence of sellers. Taking out .6669 will indicate the selling is getting stronger with the main bottom at .6641 the next key target. However, a trade through this level will change the main trend to down with .6618 – .6563 another target area.