Australian Dollar Outlook: AUD/USD Drop Deepens- Exhaustion Risk Rises

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

• AUD/USD on pace for a sixth consecutive daily decline, bears approaching October lows
• While outlook remains tilted to the downside, near-term exhaustion risk is mounting
• Resistance 6508/20, 6546 (key), 6574- Support 6461, 6440/45 (key), 6404/15

The Australian Dollar remains under pressure, with AUD/USD on track for a sixth straight daily decline and down more than 2% from the late-October highs. The selloff has pushed price back into the lower bounds of the October range, where near-term exhaustion risk is starting to build. While the medium-term trend remains bearish, traders are looking for a possible reaction off this support zone for guidance into the November opening range. The focus now shifts to whether this pullback can stabilize or fuel another leg lower 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 my last Australian Dollar Short-term Outlook we noted that AUD/USD was, “trading within a well-defined weekly range just above median-line support, and the immediate focus is on a breakout for near-term guidance with the broader outlook still weighted to the downside while within this formation.” The range broke the following week with Aussie rallying 2.7% off the October lows before reversing sharply lower post-Fed. Price is now poised to mark a six-consecutive daily decline with AUD/USD plunging 2.4% off the late-October high. Threat rises for some near-term exhaustion here, but the risk remains weighted to the downside while below the monthly 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 continuing to trade within the confines of a descending pitchfork extending off the yearly high with the bears breaking through the medina-line yesterday on the heels of the RBA rate decision. Initial support now rests with the 88.6% retracement of the mid-October rally at 6461 and is backed closely by the October low and 200-day moving average at 6440/45. Look for a more significant reaction there IF reached with a break / daily close below needed to mark downtrend resumption. Subsequent support objectives eyed at the 38.2% retracement of the yearly range and the August swing low at 6404/15 and the June low at 6372- both levels of interest for possible downside exhaustion / price inflection IF reached.

Look for initial resistance along the median-line backed by the 61.8% retracement and the September low-day close (LDC) at 6508/20. Near-term bearish invalidation is eyed at the objective weekly / monthly open at 6546 with a breach above the Fed-day reversal close at 6574 ultimately needed to suggest a more significant low is in place / a larger reversal is underway.

Bottom line: The AUD/USD decline attempting to break below slope with price now trading near the October close lows. From a trading standpoint, a good region to reduce short-exposure / lower protective stops- rallies should be limited to 6545 IF price is heading lower on this stretch with a close below the October lows needed to fuel the next leg of this decline.

Event risk is limited heading into the close of the week Australian employment data on tap next week. Stay nimble into the monthly opening range and watch the weekly closes for guidance. Review my latest Australian Dollar Weekly Forecast for a closer look at the longer-term AUD/USD technical trade levels.

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Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex