The Australian dollar rose early on Friday as speculators took profits on short positions, while bonds outperformed after Australia’s central bank appeared less hawkish on future rate hikes. After testing its lowest level since July 14 on Wednesday, the Aussie is now trading higher for the week.
At 04:30 GMT, AUD/USD is trading at 0.6824, up 0.0073 or +1.08%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust (FXA) ETF settled at $66.70, down $0.32 or -0.48%.
Traders hedge short AUD/USD despite dovish remarks from Reserve Bank of Australia (RBA) Governor Philip Lowe, who opened the door to smaller hikes now that rates have already been cut statements of 220 basis points.
The market reacted by reducing the likelihood of another hike by 50 basis points in October, while the peak in rates now stood at around 3.67% against 3.85% at the start of the week.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. However, the trend has been up since the formation of the closing price reversal trough on September 7th.
A trade through .6699 will signal a resumption of the downtrend. A move to 0.7009 will change the main trend to the upside.
The minor scale is down. A trade through .6832 will change the minor trend to the upside. This will confirm the change in dynamics.
On the downside, minor support is a pivot at 0.6765.
On the upside, the closest resistance is a short-term retracement zone between 0.6854 and 0.6891. The main resistance area is 0.6983-0.7053.
Daily Swing Chart Technical Forecast
Traders’ reaction to the minor pivot at 0.6765 will likely determine the direction of AUD/USD on Friday morning.
A sustained move above 0.6766 will indicate the presence of buyers. If that creates enough bullish momentum, look for a push to the minor top at 0.6832. This is closely followed by a short term level of 50% at 0.6854.
The removal of 0.6854 will indicate that buying is strengthening with the short term Fibonacci level at 0.6891 the next target.
A sustained move below .6765 will signal the presence of sellers. This could lead to a retest of this week’s low at 0.6699, followed by the main low from July 14 at 0.6682.
With the main trend down, expect sellers to show up at the first test of the short-term retracement zone between 0.6854 and 0.6891. This is the objective of Wednesday’s closing price reversal low.