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The Australian Dollar is holding hefty weekly gains against its U.S. counterpart on Friday as risk sentiment improved even as commodity prices stayed sky high, a potent mix for the resource-rich currencies.
At 06:00 GMT, the AUD/USD is trading .7394, up 0.0019 or +0.25%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $73.22, up $0.88 or +1.22%.
One reason for the strength in the Aussie is that futures traders have further narrowed the odds on the Reserve Bank of Australia (RBA) raising its 0.1% cash rate by June, following a very strong jobs report out on Thursday. Financial futures are now implying rates will be around 1.40% by the end of the year, compared to 0.8% back in January.
The RBA’s next policy meeting is on April 5 and there is some speculation it may drop a reference to being “patient” on rate hikes given the tightening labor market and accelerating inflation at home.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through .7441 will reaffirm the uptrend. A move through .7165 will change the main trend to down.
The main range is .7556 to .6967. The AUD/USD is currently trading on the strong side of its retracement zone at .7331 to .7261, making it support.
The short-term range is .6967 to .7441. Its retracement zone at .7173 is support. It stopped the selling at .7165 on March 15.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Friday will be determined by trader reaction to .7375.
Bullish Scenario
A sustained move over .7375 will indicate the presence of buyers. If this move generates enough upside momentum then look for a surge into the March 7 main top at .7441. Taking out this level will indicate the buying is getting stronger with the November 4, 2021 main top at .7471 the next target.
Bearish Scenario
A sustained move under .7375 will signal the presence of sellers. If this move creates enough downside momentum then look for a pullback into the Fibonacci level at .7331.
Since the main trend is up, look for a technical bounce on the first test of this level. If it fails to hold then look for the selling to possibly extend into the main 50% level at .7261.
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This article was originally posted on FX Empire