Australian Dollar Technical Outlook: AUD/USD Short-term Trade Levels
- AUD/USD on pace for its largest weekly decline since March as China tariff tensions rise
- Aussie reversal off uptrend resistance shifts focus to potential test of major support just lower
- Resistance 6520/26, 6550, 6569 (key)- Support 6477/83, 6458, 6442 (key)
The Australian Dollar is reeling, with AUD/USD on track for its largest weekly decline since March as losses accelerated today amid renewed trade tensions with China. The ongoing tariff dispute continues to escalate, with saber-rattling from both sides amplifying pressure on risk sentiment and commodity-linked currencies. The sharp selloff follows a reversal off uptrend resistance, shifting focus toward a critical support zone just lower. While the broader trend remains constructive, the near-term risk is tilted to the downside as momentum accelerates. 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 was approaching uptrend resistance and that, “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…” Aussie failed into the upper parallel post-Fed with price marking an outside-day reversal off resistance. A break below the August trendline two-days later shifted the near-term focus lower with AUD/USD now off nearly 3.4% from the yearly high.
Headlines over mounting tariff tensions with China is fueling a substantial risk sell-off today with AUD/USD poised to mark the largest weekly decline since March. The immediate risk remains tilted to the downside with key support hurdles now in view just lower.
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 descending pitchfork extending off the yearly high with a break of the median-line today keeping the focus on a possible test of the lower parallel. Initial support being tested now at the 78.6% retracement of the August advance / September range lows at 6477/83 with the lower parallel converging on the June low-day close (LDC) at 6458 and the 100% extension at 6443- both levels of interest for possible downside exhaustion / price inflection IF reached. Subsequent support objectives eyed at the 200-day moving average (currently ~6421) and 6404/14- a region defined by the 38.2% retracement of the yearly range and the August swing low.
Initial resistance is eyed back at the September LDC / 61.8% retracement at 6520/26 and is backed by a longer-dated 61.8% retracement of the broader 2024 decline at 6550. Medium-term bearish invalidation is now lowered to the August swing high at 6569. Ultimately, a breach / close above the upper parallel would be needed to suggest a more significant low is in place / a larger trend reversal is underway.
Bottom line: A reversal off uptrend resistance shifts the focus to a potential test of uptrend support just lower. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stop- rallies should be limited to 6526 IF price is heading lower on this stretch with a close below 6477 needed to fuel a test of the lower parallels.
Keep in mind the economic docket remains light next week, and traders will be closely monitoring developments regarding the ongoing government shutdown. Aussie employment data is on tap Thursday morning in Australia- 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.
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Written by Michael Boutros, Sr Technical Strategist
Follow Michael on X @MBForex
