The Australian dollar came under pressure against the US dollar in late trading on Wednesday as the prospect of a global economic slowdown weighed on investor sentiment.
Comments from Federal Reserve Chairman Jerome Powell fueled the Aussie selloff. He said there is a risk that the US central bank’s efforts to rein in persistently high inflation with interest rate hikes will slow the US economy too much.
At 19:09 GMT, AUD/USD is trading at 0.6875, down 0.0030 or -0.44%. The Invesco CurrencyShares Australian Dollar Trust (FXA) ETF is at $68.11, down $0.24 or -0.35%.
Although “there is a risk” that the Fed will slow the economy more than necessary to bring inflation back to the central bank’s 2% target, Powell said: “I would not agree to say it’s the biggest risk. The biggest mistake would be not to restore price stability.
The rally in Treasuries and the US Dollar indicates that today’s moves were likely fueled by safe-haven buying on fears of a recession.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The reaffirmation of the downtrend was the failure to hold the previous major low at 0.6869. A trade through .6964 will change the main trend to the upside.
The short-term range is 0.6851 to 0.7069. Its 50% level at 0.6960 is the closest resistance.
Daily Swing Chart Technical Forecast
Trader reaction at 0.6891 will likely determine the direction of AUD/USD heading into Wednesday’s close.
A sustained move below .6891 will indicate the presence of sellers. If this creates enough downside momentum, expect selling to eventually extend to the pair from recent major lows at 0.6851 and 0.6829.
A sustained move above .6891 will signal the presence of buyers. If this creates enough bullish momentum, look for a possible retracement towards the pivot at 0.6960 in the near term.