AUD/USD Technical Analysis – April 11, 2014 Forecast

Early Thursday, the AUD/USD soared following a drop in the Australian Unemployment Rate to 5.8% from 6.1%. The Employment Change report also beat expectations when it showed the economy added 18.1K jobs versus 7.3K. The initial spike helped the market reach overbought levels on the daily chart, triggering a mild intraday setback.

Also helping to underpin the market was the “dovish” Federal Reserve minutes. The minutes showed the Fed would remain cautious when deciding to raise interest rates. The central bank wasn’t too worried about the unemployment rate, but expressed some concern about the slow inflation growth.

Later in the session, the U.S. stock markets finished sharply lower. This could lead to profit-taking in the Aussie if investors decide to shed higher-yielding assets for the safety of the U.S. Dollar or Japanese Yen. Traders should watch for a weaker trade early in the session.

Today, China reports its latest CPI and PPI figures. These reports could also pressure the AUD/USD if they show a weakening economy.

Technically, the AUD/USD ran into a long-term resistance angle from the .9756 top when it tested .9460. This angle drops down to .9456 today.

A new short-term range may be forming between .9205 and .9460, making its 50% level at .9333 a potential downside target. A major Fibonacci level comes in at .9337, creating a possible support pivot between .9333 and .9337.

If the downside momentum continues through this zone then look for an eventual move into an uptrending angle at .9314.

The price action on Thursday and the possible drop in demand for higher yielding assets could lead to a profit-taking break in the Aussie today. Look for a downside bias.