Australian Dollar Short-term Outlook: AUD/USD Bears Go for the Break

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

• AUD/USD plunges 6.2% off yearly high- now testing multi-month uptrend support
• Australian Dollar risk for exhaustion / price inflection- US CPI, retail sales on tap
• Resistance 6582-6600, 6630s, 6677 (key)– Support 6475/97, 6433, ~6362

The Australian Dollar plunged more than 2.5% off the post-election highs with AUD/USD now threatening a break below multi-month uptrend support. The battle lines are drawn as Aussie tests the last line of defense for the bulls. These are the updated targets an invalidation levels that matter on the AUD/USD 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 four-week decline was approaching support at the 200-day moving average and that, “rallies would need to be limited by 6700 IF price is heading for a break lower with a close below 6575 needed to fuel the next leg.” Aussie broke lower two-days later with price rebounding off confluent support on election day – the post-election rally failed at the median-line (high registered at 6688) before reversing sharply lower with AUD/USD once again approaching trend support today. The focus is on a possible reaction into slope support (blue) with a break / close below needed to keep the immediate short-bias viable.  

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 approaching slope support today in early US trade. A break below this slope exposes the last line of defense for the bulls at 6475/97- a region defined by the 78.6% retracement of the yearly range and the 2024 low-day close (LDC). A close below this threshold would be needed to validate a breakout of the August uptrend- such a scenario would keep the focus on subsequent support objectives at the April LDC at 6433 and the 2022 trendline / April low near 6362.

Initial resistance is eyed at the objective monthly open (6582) backed closely by the 66-handle- A topside breach / close above this level would be needed alleviate further downside pressure with subsequent resistance objectives eyed with the 200-day moving average (currently ~6630s) and the 38.2% retracement at 6677. Ultimately a breach / close above the median-line would be needed to suggest a more significant low is place (bearish invalidation).  

Bottom line: The Aussie sell-off is now approaching multi-month uptrend support and we’re on the lookout for possible exhaustion / price inflection here. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch toward the 6500 – rallies should be limited to the monthly open IF price is heading for a break with a close below 6475 needed to fuel the next leg of the decline.

Keep in mind we get key US inflation data (CPI) and Australian employment tomorrow with US retail sales on tap Friday. Stay nimble into the releases 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.

AUD/USD Key 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