Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6750.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6745 and a take-profit at 0.6845.
- Add a stop-loss at 0.6650.
The AUD/USD price wavered during the Australian session as the US dollar strengthened. It was trading at 0.6700, which was a few points above this week’s low of 0.6635. This price was much lower than this month’s high of 0.6895.
US consumer confidence rises
The AUD/USD pair was little changed on Thursday morning after the latest consumer confidence data. According to the Conference Board, the country’s consumer confidence staged a strong recovery as inflation eased.
Consumer confidence jumped from 101.4 in November to 108.3 in December. The present situation index rose from 138.3 to 147.2 in December. Consumers are becoming more confident as inflation dropped and as the unemployment rate remained unchanged at 3.7%.
Consumer confidence is an important number because consumer spending is the biggest driver of the American economy. Therefore, the US dollar rose as investors reflected on what to expect when the Fed meets next year.
In its interest rate decision last week, the Fed hinted that it will continue hiking rates next year. It sees the terminal rate to peak at 5.1%. This view differed from what the minutes by the Reserve Bank of Australia (RBA) showed. The minutes showed that some RBA officials wanted to cease rate hikes during this month’s meeting.
There will be no major data from Australia on Thursday. Therefore, the AUD/USD pair will react to the final estimate of the American GDP data. After contracting in the first two quarters, economists expect the data to show that the economy expanded by 2.9% in Q3. The GDP price index is expected to have expanded by 3.3%.
The US will also publish the latest initial and continuing jobless data. Economists expect that the country’s initial claims dropped to 222k last week.
AUD/USD forecast
The AUD/USD price has been in a consolidation phase in the past few days. It was trading at 0.6700, which was a few points above this week’s low of 0.6630. The pair has moved below the ascending trendline shown in yellow.
It also moved to the 25-day moving average while the Bollinger Bands tightened. The Relative Strength Index (RSI) moved from the oversold level of 30 to 50. Therefore, the pair will likely have a bearish breakout as sellers target the next key support at 0.6600.
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