Aussie Struggling at .7274 – .7341 Retracement Zone

The Australian Dollar is flat on Friday after recovering from early session weakness. Gains are being capped by slightly firmer U.S. Treasury yields, but a weaker U.S. Dollar is providing support.

Besides yields and the greenback, Aussie traders will be monitoring demand for riskier assets as well as a slew of U.S. economic reports that could help determine the pace of the Fed’s interest rate hikes.

At 07:17 GMT, the AUD/USD is trading .7283, up 0.0003 or +0.04%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $72.18, down $0.12 or -0.17%.

Later today, Aussie traders will get the opportunity to react to a slew of economic data, including December retail sales numbers. Economists are expecting the print to show a decline of 0.1%, according to estimates compiled by Dow Jones. During November sales rose by 0.3%, slower than the 0.9% economists had been expecting.

Industrial production numbers will also be reported, with the Street expecting a 0.2% rise. Consumer sentiment figures will be released later Friday morning.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum shifted to the downside on Thursday with the formation of a closing price reversal top.

A trade through .7314 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through .7130.

The main range is .7556 to .6993. The AUD/USD is currently testing retracement zone resistance at .7274 to .7341. This area is controlling the near-term direction of the Forex pair.

The minor range is .7130 to .7314. Its retracement zone at .7222 to .7200 is the first downside target.

The short-term range is .6993 to .7314. Its retracement zone at .7153 to .7116 is the best support area.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Friday will be determined by trader reaction to .7274.

Bullish Scenario

A sustained move over .7275 will indicate the presence of buyers. This could trigger a surge into the minor top at .7314. Taking out this level could extend the move into .7341.

Taking out .7341 will indicate the buying is getting stronger. This could trigger an acceleration into the November 9 main top at .7431.

Bearish Scenario

A sustained move under .7274 will signal the presence of sellers. If this move creates enough downside momentum then look for a break into .7222 to .7200. Since the main trend is up, buyers could come in on the first test of this area.