Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.7000.
- Add a stop-loss at 0.6770
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6730.
- Add a stop-loss at 0.6900.
The AUD/USD price spiked to the highest level in months after the encouraging American inflation data. It rose to a high of 0.6895, which was the highest point since September 2022. It has surged by more than 11% from the lowest level this year.
Federal Reserve and Australia jobs data
The Australian dollar surged as the US dollar index recoiled following the latest American inflation data. According to the statistics office, consumer inflation dipped in November for the second month straight.
The headline inflation dropped from 0.4% in October to 0.1% in November. On a year-on-year basis, inflation dropped from 7.7% to 7.1%. These numbers were lower than the median estimates of 0.3% and 7.3%, respectively.
Meanwhile, excluding food and energy, inflation dropped to 0.2% and to 6.0%. These numbers mean that inflation peaked earlier this year. They also signal that the actions of the Fed and Biden administrations were having a positive impact on inflation.
The AUD/USD price will next react to the latest Federal Reserve decision. Economists believe that the bank will hike interest rates by 0.50% after rising by 0.75% in the past four meetings. The Fed has already raised rates by 400 basis points already.
Analysts expect that the Fed will lower the size of rate hikes in the first quarter and then leave them high for a while.
The next main data to watch will be the latest Australian jobs data scheduled for Thursday. Economists expect that the country’s unemployment rate remained at 3.4%, which is the lowest level in decades. The participation is expected to have risen to 66.6% while the economy added 19k jobs. Australia is facing a major labor shortage as key sectors of the economy like tourism and mining booms.
AUD/USD forecast
The Australian dollar made a bullish breakout on Wednesday. As it rose, it moved above the important resistance level at 0.6798, which was the upper side of the ascending triangle pattern. It has moved above the 25-day and 50-day moving averages while the MACD moved above the neutral point. The same is true with the Awesome Oscillator pattern.
Therefore, the pair will likely continue rising as buyers target the key resistance point at 0.7000 ahead of the FOMC decision. The stop-loss of this trade will be at 0.6725.
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