Australian Dollar Technical Outlook: AUD/USD Short-term Trade Levels
- AUD/USD rallies over 4% off the August low- bulls eye resistance at fresh yearly highs
- Australian Dollar risk for exhaustion / price inflection- FOMC rate decision on tap
- Resistance 6700, 6723 (key), 6810/16- Support 6650, 6622, 6590 (key)
The Australian Dollar has rallied nearly 2.3% since the start of September with AUD/USD trading to fresh yearly highs today. The advance is now approaching uptrend resistance ahead of today’s highly anticipated Federal Reserve interest rate decision. 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 highlighted the risk for exhaustion as AUD/USD was approaching resistance and that, “losses would need to be limited to 6458 IF price is heading higher on this stretch with a close above 6590 ultimately needed to mark resumption of the broader uptrend in AUD/USD.” Aussie fell more than 1% into the September open with price registering an intraday low at 6483 before rebounding sharply higher. The advance has extended more than 3.1% off the monthly low with AUD/USD now trading just below resistance at the upper parallel (blue) / 6700- looking for a reaction off this zone IF reached over the next few days with the rally vulnerable heading into today’s FOMC interest rate decision.
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 near-term ascending pitchfork off the August low with he weekly opening-range carved just above the median-line. Weekly-open support rests at 6650 and is backed by the 2024 September low at 6622 and the July high-day close (HDC) at 6590. Ultimately, a break below the late-August trendline (red) would be needed to suggest a more significant high is in place / a larger reversal is underway. Subsequent support seen at the 61.8% retracement of the 2024 decline at 6550- look for a larger reaction there IF reached.
Initial resistance is eyed at 6700 and is backed closely by the 78.6% retracement at 6723- a topside breach / close above this threshold is needed to mark resumption of the broader uptrend. The next major technical consideration is eyed at the 2023 /2024 yearly opens at 6810/16.
Bottom line: The Aussie breakout is approaching uptrend resistance and while the broader outlook remains constructive, the immediate advance may be vulnerable heading into the FOMC rate decision later today. From a trading standpoint, losses would need to the August trendline IF price is heading higher on this stretch with a close above 6723 ultimately needed to mark uptrend resumption.
Keep in mind we get the release of the Fed’s updated Summary of Economic Projections, and traders will be focused on the interest rate dot plot for guidance on rates. Markets are fully priced for a 25bp cut tomorrow with Fed Fund Futures still calling for three-cuts in 2025. Investors will be closely tracking any changes to the forecasts on growth, inflation and employment and the potential impact on monetary policy into the close of the year. Stay nimble into the release and subsequent presser 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.
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Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
