Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6800.
- Add a stop-loss at 0.7000.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6965 and a take-profit at 0.7050.
- Add a stop-loss at 0.6885.
The AUD/USD price plunged to the lowest point since August 4th as the market reacted to the latest Australian jobs data and FOMC minutes. It fell to a low of 0.6912, which was substantially lower than this month’s high of 0.7140.
Australia Jobs Data and FOMC Minutes
The AUD/USD price continued falling after the Federal Reserve published minutes of the past meeting. The minutes revealed that the officials were convinced that higher interest rates were necessary to deal with the elevated inflation.
However, many members were concerned that the bank could be hiking rates at a significantly fast pace. The minutes said:
“Many participants remarked that there was also a risk that the committee could tighten the stance of policy by more than necessary to restore price stability.”
As such, analysts believe that the Federal Reserve will start slowing its rate increases in the coming meetings. Precisely, they expect that the bank will hike by 0.50% in September followed by 0.25% in the final two meetings of the year. Fed officials like Neel Kashkari and Esther George will provide their thoughts in speeches later on Thursday.
The pair also declined after the strong American retail sales data. The Commerce Department said that the volume of sales held steady in July as they rose by 0.8% from a month earlier. This happened as the price of gasoline dropped from a high of $5 per gallon in June to about $4.30 in July. Retailers like Walmart and Home Depot published strong results this week.
The AUD/USD price dropped after Australia published relatively weak jobs numbers. The data showed that the country lost 40k jobs in July after it added 88.4k in the previous month. The unemployment rate dropped from 3.5% to 3.4% while the participation rate dropped to 66.2%.
AUD/USD Forecast
The AUD/USD price continued dropping on Thursday morning as it fell to the lowest point since August 8. The pair moved below the important support level at 0.7050, which was the highest point on August 1.
It dropped below the 50% Fibonacci Retracement level and the 25-day and 50-day moving averages. The Relative Strength Index (RSI) tilted downwards. Therefore, the pair’s path of the least resistance is lower, with the next key support being at 0.6800.
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