Bullish view

• Buy the AUD/USD pair and set a take-profit at 0.6600.
• Add a stop-loss at 0.6400.
• Timeline: 1-2 days.

Bearish view

• Sell the AUD/USD and set a take-profit at 0.6400.
• Add a stop-loss at 0.6600.
   

(Click on image to enlarge)

The AUD/USD exchange rate rose to its highest level in a week after the Australian Bureau of Statistics published a strong monthly inflation report. It jumped to a high of 0.6510, up from this month's low of 0.6415.
 

Australia Rate Cut Odds Fall After the Monthly Inflation Report

The AUD/USD exchange rate jumped after the ABS released a strong inflation report. The report, known as the monthly CPI indicator, rose to 2.8% in July from 1.9% in June.

This report came a day after the Reserve Bank of Australia (RBA) published minutes of the last meeting in which officials voted to slash interest rates by 25 basis points.

These minutes showed that most officials believed that a cut was appropriate after the quarterly inflation report showed that the headline and trimmed mean inflation figures moved close to the 2% target level.

They also showed some concerns about the state of the economy, which they expect to slow modestly this year because of Donald Trump's tariffs.

Therefore, the monthly CPI figure could push the officials to avoid cutting interest rates in the next meeting as they await for more data on inflation.

The next important catalyst for the AUD/USD exchange rate will be the upcoming economic data from the United States, where the Bureau of Economic Analysis will release the second reading of the second quarter GDP data. Economists expect the report to show that the economy expanded by 3.1% in Q2 after contracting by 0.5% in Q2.

The US will also release the latest initial and continuing jobless claims data and pending home sales.

These numbers will come as investors predict that the Federal Reserve will start to cut interest rates in the next meeting, as Jerome Powell hinted at the Jackson Hole Symposium. New York Fed's John Williams also hinted that he would support a cut in that meeting.

AUD/USD Technical Analysis

The AUD/USD exchange rate has bounced back a bit in the past few days after it formed a double bottom chart pattern at 0.6415. It is now approaching the neckline at 0.6566, its highest level this month.

The pair has moved slightly above the Ichimoku cloud indicator and the top of the trading range of the Murrey Math Lines. It has also moved above the 50-day moving average

Therefore, the pair will likely continue rising as bulls target the ultimate resistance level at 0.6600. A drop below the support at 0.6400 will invalidate the bullish outlook.

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