AUD/USD Forex Technical Analysis – May Have Enough Near-Term Momentum to Challenge .7144

The Australian Dollar is trading higher early Monday as the U.S. Dollar began the week under pressure. The greenback is moving lower as investors reduced bets on further gains from rising U.S. interest rates.

Meanwhile, the Aussie is getting a boost on hope that loosening COVID-related restrictions in China can help promote global growth. A technical bounce in U.S. stock market futures also pulled the risk-sensitive Australian Dollar up.

At 03:17 GMT, the AUD/USD is trading .7094, up 0.0052 or +0.74%. On Friday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $69.68, down $0.20 or -0.29%.

Shanghai is edging out of lockdown and an unexpectedly big rate cut in China last week has been taken as a signal that authorities are going to provide support to a recovery. The city of 25 million expects to lift its city-wide lockdown and return to more normal life from June 1.

In other news, Australia elected a new government on Saturday, though the market reaction was muted as polls had predicted victory for the center-left Labor Party and it is not expected to shift the direction or pace of interest rate rises.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through .7266 will change the main trend to up. A move through .6829 will signal a resumption of the downtrend.

The short-term range is .7266 to .6829. The market is currently testing the upper level of its retracement zone at .7047 to .7099.

On the upside, the next resistance area is .7144 to .7218. This is followed by .7245 to .7343.

On the downside, the nearest support is a minor pivot at .6983. This level will move up as long as the AUD/USD keeps producing higher-highs.

Daily Swing Chart Technical Forecast

Trader reaction to the 50% level at .7047 is likely to determine the direction of the AUD/USD early Monday.

Bullish Scenario

A sustained move over .7048 will indicate the presence of buyers. The first upside target is the Fibonacci level at .7099.

Sellers could come in on the first test of .7099, but overcoming this level could trigger a surge into another 50% level at .7144, followed by a Fibonacci level at .7218.

Bearish Scenario

A sustained move under .7047 will signal the presence of sellers. If this move creates enough downside momentum then look for a move into the trailing pivot at .6963.