Australian Dollar Short-term Outlook: AUD/USD Bears Lay in Wait

Australian Dollar Technical Outlook: AUD/USD Short-term Trade Levels

• AUD/USD plunges more than 5% in November- testing downtrend support into yearly open
• Australian Dollar fifth weekly decline on building daily divergence-risk for inflection
• Resistance 6270/96, 6348/62 (key), 6434– Support 6170/88 (key), 6100, 6007/45

The Australian Dollar is poised to mark a fifth-consecutive weekly decline with AUD/USD trading near the 2022 lows into the start of the year. The battle lines are drawn on the Aussie short-term technical charts as the bears test downtrend support.

Australian Dollar Price Chart – AUD/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; AUD/USD on TradingView

Technical Outlook: In last month’s Australian Dollar Short-term Outlook we noted that a two-month decline was approaching the yearly lows and that the short-bias may be, “vulnerable while above 6433. From a trading standpoint, rallies should be limited to the 200-day moving average IF price is heading lower on this stretch with a break of the range lows needed to mark downtrend resumption.”

Aussie straddled the November low at 6434 for over a week before finally breaking lower into the close of the year. A decline of more than 5.1% off the December high is now testing downtrend support into the January open, and the focus is on possible inflection here in the days ahead.

Australian Dollar Price Chart – AUD/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; AUD/USD on TradingView

Notes: A closer look at Aussie price action shows AUD/USD continuing to trade within the confines of the descending pitchfork we have been tracking of the late-September high with the lower parallel highlighting support here at the objective monthly & yearly opens / 2022 swing low at 6170/88- looking for a possible reaction here.

A break / daily close below this threshold would threaten another bout of accelerated Aussie losses with subsequent support objectives eyed at 6100 and the next major technical consideration at 6007/45- a region defined by the 2008 low, the 61.8% extension of the 2021 decline, and the 78.6% retracement of the 2020 advance. Look for a larger reaction there IF reached.

Initial resistance is eyed at the 2023 low / close low at 6270/95 and is backed by the August / April lows at 6348/62. Note that the median-line converges on this zone over the next few weeks and a breach / close above would be needed to suggest a more significant low was registered / a larger reversal is underway towards the November low at 6434.

Bottom line: Aussie is trading into confluent support into the start of the month / year and while the broader outlook remains weighted to the downside, the immediate focus is on possible inflection off this zone. From a trading standpoint, rallies should be limited to the medina-line IF price is heading lower on this stretch with a close below 6170 needed to fuel the next major leg of the decline.

Keep in mind we are in the early throws of the January opening range with US non-farm payrolls on tap next week. Stay nimble into the release and watch the weekly close here for guidance. Review my latest Australian Dollar Weekly Forecast for a closer look at the longer-term AUD/USD technical trade levels.

Key AUD/USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex