AUD/USD Forex Technical Analysis – Weakens Under .7814, Strengthens Over .7860

The Australian Dollar is trading higher on Thursday, but well off its session highs. The Aussie was supported early in the session by a weaker U.S. Dollar after the Fed said on Wednesday that there would be no interest rate hikes through 2023 despite an improving outlook and a turn this year to higher inflation.

At 08:25 GMT, the AUD/USD is trading .7819, up 0.0020 or +0.26%.

The Aussie Dollar surged to its high of the session after a report showed Australian employment surpassed all expectations to jump for a fifth consecutive month in February while the jobless rate fell much more rapidly than expected, in yet another sign the countrys economy was moving in the right direction.

The strong data challenges the Reserve Bank of Australias lower-for-longer monetary policy pledge, triggering a jump in the local dollar. However, the AUD/USD began to weaken amid a jump in U.S. Treasury yields and a recovery by the U.S. Dollar.

The main trend is up according to the daily swing chart. The trend turned up on Wednesday and was reaffirmed earlier today. A trade through .7700 will change the main trend to down.

The AUD/USD is currently trading on the strong side of the main retracement zone at .7785 to .7733. This zone is new support. Holding above this zone will give the Forex pair an upside bias.

The short-term range is .8007 to .7621. Its retracement zone at .7814 to .7860 is currently being tested.

The direction of the AUD/USD is likely to be determined by trader reaction to the short-term 50% level at .7814.

Bullish Scenario

A sustained move over .7814 will indicate the presence of buyers. This could trigger a rally into the short-term Fibonacci level at .7860, which is the potential trigger point for an acceleration to the upside. The daily chart shows there is plenty of room to the upside with .8007 the next major upside target.

Bearish Scenario

A sustained move under .7814 will signal the presence of sellers. The first downside target is the main 50% level at .7785. Since the main trend is up, buyers could come in on the first test of this level.

If .7785 fails as support then look for a possible steep break into the main Fibonacci level at .7733. Taking out .7700 will change the main trend to down.