Bearish view

• Sell the AUD/USD pair and set a take-profit at 0.6450.
• Add a stop-loss at 0.6650.
• Timeline: 1-2 days.

Bullish view

• Buy the AUD/USD pair and set a take-profit at 0.6650.
• Add a stop-loss at 0.6450

(Click on image to enlarge)

The AUD/USD exchange rate continued rising on Tuesday morning as market participants reacted to the latest Australian inflation and GDP reports. It rose for seven consecutive days, reaching a high of 0.6565, its highest point since November 13.
 

RBA Rate Hike Bets Rise

The AUD/USD exchange rate has rebounded in the past few days as traders anticipate the RBA will hike interest rates in the next meeting.

These odds rose after the Australian Bureau of Statistics (ABS) published strong inflation data last week. A report showed that the headline and core inflation reports remained above the 2% target of the RBA in the last meeting.

Another Bloomberg survey showed that economists expect the upcoming data to show that the economy expanded in the third quarter. The estimate is that the economy grew by 0.7% in this period, marking the strongest reading since 2022. The YoY growth is expected to come in at 2.2%, higher than what the Reserve Bank of Australia (RBA) predicted.

Still, a survey by economists showed that they have mixed outlook for what the bank will do at the next meeting. Some analysts believe that the bank will hike interest rates, while others expect it to cut or leave them unchanged at 3.60%.

On the other hand, market participants strongly believe that the Federal Reserve will cut interest rates by 0.25% in the next meeting as officials remain concerned about the labor market, where the unemployment rate has risen to 4.3%.

The pair also reacted to a statement that Trump had completed his decision on the next Fed Chair, with odds showing that he will name Kevin Hassett, who has supported rate cuts to replace Jerome Powell.
 

AUD/USD Technical Analysis

The daily chart shows that the AUD/USD exchange rate has rebounded in the past few days as it jumped from a low of 0.6420 in November to the current 0.6548.

It has risen and crossed the 50-day and 25-day Exponential Moving Averages (EMA), a sign that bulls are gaining momentum. The two lines of the Percentage Price Oscillator (PPO) have formed a bullish crossover pattern.

However, the pair remains below the Supertrend indicator, and has formed a head-and-shoulders pattern, a common bearish reversal sign.

Therefore, the most likely scenario is where this bullish momentum fades and the pair resumes the downtrend. Such a move will see it retest the support at 0.6420, the neckline of the head-and-shoulders pattern.

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