Bearish view

• Sell the AUD/USD pair and set a take-profit at 0.6700.
• Add a stop-loss at 0.6875.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 0.6800 and a take-profit at 0.6900.
• Add a stop-loss at 0.6700.

(Click on image to enlarge)

The Australian dollar retreated for four consecutive days, erasing most of the gains made in September. The AUD/USD exchange rate retreated from the year-to-date high of 0.6942 to slightly below the key support at 0.6800.

US inflation and Fed minutes

The AUD/USD pair fell after the US released strong job numbers. According to the Bureau of Labor Statistics (BLS), the economy added over 254k jobs in September, higher than the median estimate of 147k.

The private sector added 223k jobs, while the unemployment rate dropped from 4.2% to 4.1% in September.

These numbers mean that the US economy is doing modestly well, meaning that the Federal Reserve will not be in a hurry to deliver more jumbo cuts.

Looking ahead, the AUD/USD will react to the upcoming Federal Reserve minutes, which will provide more context for the last meeting. The Fed decided to cut interest rates by 0.50%, and officials expressed concern about the labor market.

These minutes will provide good guidance on what to expect in the next meeting in November. Most analysts see the bank either cutting rates by 0.25% or leaving them unchanged.

The other important news will be Thursday’s US inflation report. Economists expect the numbers to show that the headline and core inflation continued falling in September.The headline CPI is expected to move from 2.5% in August to 2.3%, while the core CPI will move from 3.2% to 3.1%.

Other key catalysts for the AUD/USD will include the Reserve Bank of Australia (RBA) minutes. Unlike the Fed, the RBA left rates unchanged and changed its tune on the potential for rate hikes in the future.

AUD/USD technical analysis

The AUD/USD pair retreated sharply as the US dollar index rebounded. It has retreated from the year-to-date high of 0.6942 to 0.6795, its lowest point on September 20th.

The pair has dropped below the key support point at 0.6870, its highest point on December 23rd. On the positive side, the pair has remained above the 50-day Exponential Moving Average (EMA).

The momentum indicator and the Relative Strength Index (RSI) have drifted downwards. Also, the two lines of the MACD have drifted downwards.

Therefore, the pair will continue falling as sellers target the key support at 0.6750, the 50-day EMA. This trade's stop loss is at 0.6875.

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