Bearish view

• Sell the AUD/USD pair and set a take-profit at 0.6470.
• Add a stop-loss at 0.6595.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 0.6540 and a take-profit at 0.6625.
• Add a stop-loss at 0.6485.

(Click on image to enlarge)

The AUD/USD pair drifted downward slightly in the overnight session as US bond yields continued rising. The pair retreated to a low of 0.6535, its lowest swing on February 20th as focus shifted to important US consumer confidence and housing numbers.

US consumer confidence data ahead

The AUD/USD pair retreated as America’s bond yields continued their recovery. The 10-year Treasury yield rose to 4.30%, its highest point since November 30th. Similarly, the 30-year yield jumped to 4.41% while the spread between the 10-year and 2-year bond yields remained at minus 44%.

The ongoing recovery of bond yields is a sign that investors expect that the Federal Reserve will maintain its hawkish tone for a while. Besides, the most recent numbers showed that the economy was doing well even as inflation remained above 3% in January. Federal Reserve officials have also confirmed that they will not be in a hurry to cut rates.

The next important economic data to watch will be the upcoming US housing and consumer confidence figure. Economists polled by Reuters expect the data to show that consumer confidence remained unchanged at 114.8 in February.

The confidence level has rebounded recently, helped by the stabilizing inflation and higher wages. Recent data revealed that the average hourly earnings rose by 4.5% in January, higher than the expected 4.1%.

The other important data will be the upcoming US house price index. Economists believe that the index rose by 0.3% in December. House prices have remained strong recently as demand continued to outweigh supply.

The US will also publish January’s durable goods orders. The headline figure is expected to show that orders crashed by 4.7% in January while core orders rose by 0.2%. These numbers are crucial because they provide more information about the economy.

AUD/USD technical analysis

The AUD/USD pair retreated to a low of 0.6535 on Tuesday morning. Its recent recovery faltered after hitting the key resistance point at 0.6594. It has moved slightly below the 50-period and 25-period Exponential Moving Averages (EMA).

The pair has retested the important support, which was its lowest swing on January 18th and December 17th. Meanwhile, the Relative Strength Index (RSI) has crossed the neutral point at 50 while the MACD has moved below the zero line.

Therefore, the pair will likely continue falling as traders target the key support at 0.6470, its lowest point on February 5th.

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