Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6950.
Add a stop-loss at 0.7050.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7050.
Add a stop-loss at 0.6950.
The AUD/USD pair wavered on Tuesday morning, extending the consolidation that began late last week. It was trading at 0.7012, a few points below this month’s high of 0.7030.
Investors are now focused on the upcoming US macro data, the Federal Reserve’s interest rate decision, and Australian inflation figures.
US and Australian Macro Data and Fed Decision
The AUD/USD pair remained in a tight range as traders waited for the upcoming US consumer confidence report by the Conference Board. A report released last month by the University of Michigan showed that consumer confidence continued to weaken this month because of the ongoing inflation concerns. Americans are also concerned about the labor market, which showed that the unemployment rate ticked upward to 4.3% last month.
Consumers are also concerned about inflation, which has remained at an elevated level because of rising crude oil prices. Brent and the West Texas Intermediate (WTI) have continued rising, with the former reaching its highest level since May this year. Gasoline and diesel prices have continued rising.
The AUD/USD pair will also react to the latest durable goods orders and house price index report. These numbers will come a day before the Federal Reserve delivers its interest rate decision. Economists expect the bank to leave interest rates unchanged between 3.75% and 4%.
Further, the pair will also react to the upcoming Australian inflation report, which will help the Reserve Bank of Australia (RBA) when making its interest rate decision. Economists expect the upcoming report to show that the headline Consumer Price Index (CPI) rose 3.9% in the third quarter from 4.0% in Q2. A higher inflation than expected will push the bank to hike interest rates in the next meeting.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has rebounded in the past few days. It moved from a low of 0.6892 on October 15 to a high of 0.7030. It then pulled back to the current 0.7015, and there are signs that the upward momentum is continuing.
The pair has found resistance at the 50-day Exponential Moving Average (EMA), while the Average Directional Index (ADX) has pulled back to 28.4 from last week’s high of 41. Therefore, the pair will likely retreat further in the near term. If this happens, it may drop to the key support level of 0.6950.
Comments
Log in or sign up to join the conversation.