Australian Dollar Short-term Outlook: AUD/USD Bulls Emerge

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

• AUD/USD recovery off downtrend support halted at pivotal resistance
• Australian Dollar February range-breakout in focus– US CPI / PPI on tap next week
• Resistance 6290/96 (key), 6348/62, 6414– Support 6170/88 (key), 6100, 6007/45

The Australian Dollar is poised to snap a four-day rally today with AUD/USD responding to technical resistance early in the month. The February opening-range has taken shape just above yearly open support, and the focus is on a breakout in the days ahead. Battlelines drawn on the Aussie short-term technical charts.  

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 AUD/USD had broken out of a multi-month downtrend and that, “From at trading standpoint, losses should be limited to 6188 IF price is heading higher on this stretch with a close above 6300 needed to suggest a more significant low was registered last week / a larger bear-market correction is underway.”

Aussie attempted to break higher two-days later before faltering into the close of January. A retest of yearly-open support into the February open marked an intraday low at 6087 before reversing sharply higher with the subsequent four-day rally exhausted back at resistance again this week. The focus is now on a breakout of the 6188-6300 zone for guidance with the bears vulnerable while above the yearly open.

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 trading within the confines of an ascending pitchfork extending off the lows. Initial resistance stands with the 23.6% retracement of the September decline / 2023 low-close at 6290/96. A topside breach / close above this threshold is needed to fuel the next leg of the advance towards the August / April lows at 6348/62 and the 38.2% retracement at 6414- both levels of interest for possible topside exhaustion / price inflection IF reached.

Look for initial support at median-line (currently ~6250s) with near-term bullish invalidation steady at the objective 2022 low / 2025 yearly open at 6170/88. Ultimately, a close below the lower parallel would be needed to mark downtrend resumption towards 6100 and key support 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.

Bottom line: Aussie is trading into technical resistance with the February opening-range taking shape just below- looking for a breakout in the days ahead. From a trading standpoint, losses would need to be limited to the yearly open IF price is heading higher on this stretch with a close above 6300 needed to fuel the net leg of the advance.

Keep in mind we get the release of key U.S. inflation data next week with the Consumer Price Index (CPI) & the Producer Price Index (PPI) on tap. Stay nimble into the releases and watch the weekly closes 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