Australian Dollar Forecast: AUD/USD Breakout Sparks Largest Weekly Surge Since April

Australian Technical Forecast: AUD/USD Weekly Trade Levels

AUD/USD delivered its largest single-week advance since April, with the breakout driving price near three-year highs
Aussie rally now approaching its first meaningful hurdle- risk for price inflection into uptrend resistance
Australia inflation / Fed interest rate decision on tap
Resistance 7008 (key), 7109/37, 7208/14- Support 6795-6811 (key), 6817, 6674

The Australian Dollar is surging with AUD/USD approaching three-year highs as the bulls attempt to close out a seventh daily advance. A two-week rally of more than 4.4% is now approaching uptrend resistance and places the focus squarely on how the market responds at this threshold. While the broader trend remains constructive, this area represents an important checkpoint for the rally, as a sustained move higher would signal scope for continuation, while a failure here could prompt a period of consolidation or pullback. The reaction around this level should provide valuable guidance on the durability of the advance in the sessions ahead. Battle lines drawn on the AUD/USD weekly technical chart ahead of tomorrow Fed rate decision.

Australian Dollar Price Chart – AUD/USD Weekly

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

Technical Outlook: In my last Australian Dollar Forecast we noted that AUD/USD was approaching uptrend resistance into the start of the month and that, “ losses would need to be limited to 6592 IF price is heading higher on this stretch with a close a above the median-line needed to fuel the next leg of the advance.” Aussie registered an intraweek low at 6663 that week before rebounding with the bulls posting the largest single-week advance since April last week.

The rally is now poised to mark a seventh-consecutive daily advance with price extending into resistance at the 2024 swing high and the 50% retracement of the 2021 decline at 6942/61. Note that the upper parallel converges on the 100% extension of the November rally just higher at 7008- look for a larger reaction there IF reached with a breach / close above needed to fuel the next major leg of the advance. Subsequent resistance objectives are eyed at the 2023 high-close (HC) and the August 2022 swing high at 7108/37, and 7214/08- a region defined by the 61.8% retracement and the 100% extension of the 2025 advance. Both areas represent zones of interest for possible top-side exhaustion / price inflection IF reached.

Weekly support rests with the 2024 high-week close (HWC) and he 2024 yearly open at 6795-6811. Note that the median-line converges on this zone over the next few weeks and a break / weekly close below would be needed to threaten a larger correction within the November uptrend. Subsequent support rests at the 2025 close high at 6717, with broader bullish invalidation now raised to the objective yearly open at 6674. A break / close below this threshold would be needed to suggest a more significant high is in place and a larger trend reversal is underway.

Bottom line: AUD/USD is testing lateral resistance today with weekly momentum breaking into overbought territory for the first time in nearly five-years (February 2021). Looking for a reaction up here. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops- losses should be limited to 6795 IF price is heading higher on this stretch with a close above 7008 ultimately needed to fuel the next major leg of the advance.

Keep in mind we get the release of Australian CPI data tonight with the FOMC rate decision on tap tomorrow. On the heels of last week’s strong Aussie employment report, a higher print on inflation could further fuel expectations of a possible hike from the RBA later this year. Meanwhile, the Fed is widely expected to leave rates unchanged tomorrow with Fed funds futures currently pricing a 71% chance that the central bank will be on hold through April with a 60% chance the first rate cut of the year will be delivered at the June rate decision. Stay nimble into these releases and watch the weekly close for guidance here. Review my latest Australian Dollar Short-term Outlook for a closer look at the near-term AUD/USD technical trade levels.

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--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex

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