Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6775.
Add a stop-loss at 0.6920.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.6920.
Add a stop-loss at 0.6775.
The AUD/USD pair extended its sell-off and fell to 0.6862, its lowest level since April 2. It is now down 5.20% from its September high, and the decline could continue as the odds of a Federal Reserve rate hike rise.
Australian Dollar Slipped After NFP Data
The AUD/USD pair dropped after the United States published encouraging jobs numbers on Friday. These numbers revealed that the economy created over 165k jobs last month, much higher than what analysts were expecting.
The report comes at a time when US inflation has remained above the 2% target. As a result, investors are pricing in more interest rate hikes from the Fed. The bank has already hiked by 0.25%, and odds that it will increase in the coming meeting in December jumped to over 90%.
The Bureau of Labor Statistics (BLS) will release the latest consumer inflation report on Tuesday this week. Economists expect the report to show that the headline and core CPI remained above 2% in October. Inflation has remained above the 2% target for years, a trend that accelerated because of Donald Trump’s tariffs and Iran war.
Several Federal Reserve officials will talk this week, providing hints on what to expect in the final meeting of the year. Some of these are officials like Lorie Logan, Tom Barkin, Austan Goolsbee, Michele Bowman, and Mary Daly.
Traders also expect the Reserve Bank of Australia (RBA) to raise interest rates at its final meeting of the year. Economists forecast a hike to 5%, which would be the sixth increase this year and make the RBA the most hawkish central bank in the world. At its last meeting, the bank raised rates, with officials citing excess demand in the economy.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has been under pressure in the past few days, moving from a high of 0.7066 on October 9 to the current 0.6862. It has moved below the crucial support level of 0.6895, its lowest point on October 15.
The pair has also dropped below the crucial support level of 0.6867, its lowest level on June 30. Moving below these levels was a sign that bears are prevailing. Also, the Relative Strength Index (RSI) has continued falling. Therefore, the pair will likely continue falling, potentially to the oversold level of 0.6775.
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