The Australian Dollar is inching lower early Thursday after giving up an earlier gain that took the currency to its highest level since November 26. The Aussie has recovered nicely this week after touching a 13-month low on December 3.
A “sell the rumor, buy the fact” rebound ignited the rally on Tuesday after the Reserve Bank of Australia (RBA) downplayed the economic impact of the Omicron coronavirus variant. Improving risk sentiment and a surge in the Chinese Yuan provided an extra tailwind.
At 08:17 GMT, the AUD/USD is trading .7164, down 0.0007 or -0.10%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust (FXA) ETF settled at $71.25, up $0.60 or +0.85%.
Upbeat trade data from China, along with stimulus steps from Beijing to underpin the economy and the property sector, helped push the Yuan to a three-year high against the U.S. Dollar. This lifted the Aussie as investors use it as a liquid proxy for the Chinese currency.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through .7431 will change the main trend to up. A move through .6993 will signal a resumption of the downtrend.
The minor trend is up. It changed to up earlier in the session when buyers took out the last minor top at .7173. This move shifted momentum to the upside.
One minor range is .7371 to .6993. The AUD/USD is currently testing its 50% level at .7182.
The short-term range is .7431 to .6993. Its retracement zone at .7212 to .7264 is the primary upside target. Since the main trend is down, sellers are likely to come in on a test of this area.
The new minor range is .6993 to .7187. Its 50% level at .7090 is the nearest support. It will move up as the AUD/USD moves higher.
Daily Swing Chart Technical Forecast
The direction of the AUD/USD on Thursday is likely to be determined by trader reaction to .7182.
A sustained move under .7182 will indicate the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor pivot at .7090.
Trader reaction to .7090 could set the short-term tone in the market. Aggressive counter-trend buyers could come in on a test of this level. They are going to try to form a potentially bullish secondary higher bottom.
A sustained move over .7182 will signal the presence of buyers. This could lead to a labored rally with potential resistance at .7212 and .7264. Since the trend is down, look for sellers to return on a test of this area.