The Australian dollar fell against the US dollar on Friday, as the Fed’s tone offset a sharp turnaround from Australia’s central bank, while a pullback in commodity prices also reversed their recent strength.
The greenback has been strengthening against the US dollar since Wednesday after minutes of a March Fed meeting showed that “many” participants were prepared to raise interest rates in 50-basis-point increments in the coming months.
The Fed also said it would shrink its balance sheet by $95 billion a month after the May meeting, the start of a reversal of massive stimulus to the economy during the pandemic.
On Friday, AUD/USD closed down 0.0019 or -0.25% at .7460. The Invesco CurrencyShares Australian Dollar Trust ETF (FXA) was down $0.24, or -0.32%, to close at $73.91.
Earlier in the week, the Australian dollar rose to its highest level since November 2021, fueled by the prospect of a policy tightening by the Reserve Bank of Australia (RBA). The central bank abandoned its pledge to “be patient” on the tough policy, while keeping the key rate at a record low now, as expected.
daily swing chart technical analysis
The main trend is down as per the daily swing chart. The trend went down when the sellers found the last swing bottom at .7456.
A trade through .7426 would indicate a resumption of the downtrend. The main trend will turn on a move through .7661.
AUD/USD is currently trading inside the long term retracement zone from .7429 to .7538.
The short term range is .7165 to .7661. Its retracement zone is the second target area at .7413 to .7354.
short term outlook
The direction of AUD/USD early Monday is likely to be determined by traders’ reaction to the longer term 50% level at .7429.
Bullish outlook
A sustained move above .7429 would indicate the presence of buyers. If this creates sufficient upside momentum, look for a retracement in the longer term Fibonacci level at .7538, followed by a close of the minor pivot at .7544.
recession outlook
A continued move under .7413 would indicate the presence of sellers. The first target is the short-term 50% level at .7413.
Watch for a technical jump in the first test from .7429 to .7413. However, if .7413 fails to hold as support, a selloff could potentially extend to the short-term Fibonacci level at .7354. This is a potential trigger point for a downside correction.
