The Australian dollar is higher on Thursday as investors bet on reports that the Omicron coronavirus variant was only mild in its effects, meaning its spread would only be a short-term drag on the economy global. The early morning strength puts the Aussie at its highest level since Nov. 24 and in a good position to continue its movement after the Christmas holidays. Although some traders remain cautious due to the lightly traded holiday market.
At 08:56 GMT, the AUD / USD is trading at 0.7243, up 0.0020 or + 0.28%. On Wednesday, the Invesco CurrencyShares Australian Dollar Trust (FXA) came in at $ 71.61, up $ 0.59 or + 0.83%.
The Australian dollar was also boosted by bullish economic news with private credit up 0.9% in November, the biggest gain since 2007, when the housing market was booming before the global financial crisis.
Technical analysis of the daily swing chart
The main trend is upward on the daily swing chart. The trend deepened earlier in the day as buyers pulled the previous major high at 0.7224. A move through .7083 will change the main trend down.
AUD / USD is currently trading on the strong side of three pivots at .7212, .7182 and .7108, making those levels support.
The main trend is 0.7556 to 0.6993. Its retracement area at 0.7275 to 0.7341 is the next target area on the upside. The sellers could enter on the first test of this area. Overcoming it, however, will put the AUD / USD in a position to accelerate higher.
Technical forecasts of the daily swing chart
AUD / USD direction on Thursday will likely be determined by traders’ reaction to .7212.
A sustained move above .7212 will indicate the presence of buyers. If this move is able to create enough bullish momentum, we might see an increase from 0.7275 to 0.7341. It all depends on the volume, which may be lower than average due to holiday trading.
A sustained move below .7212 will signal a return of sellers. The first target is .7182. If this level fails as support, be prepared for a possible acceleration towards .7108.