Bullish view
- Set a buy-stop at 0.6815 and a take-profit at 0.6915.
- Add a stop-loss at 0.6700.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6773 and a take-profit at 0.6700.
- Add a stop-loss at 0.6900.
The AUD/USD exchange rate pulled back on Thursday morning as the market reflected on the Fed decision, weak Chinese economic data, and the latest Australian jobs numbers. The Aussie dropped to 0.6792 against the US dollar.
Fed, Australia, and China data
The Federal Reserve concluded its two-day monetary policy meeting on Wednesday and decided to leave interest rates unchanged for the first time since 2022. The bank said that the pause was temporary and that rate hikes could resume in the coming months. In the accompanying statement, the dot plot pointed to two more hikes this year.
Meanwhile, the Australian labor market is doing well, putting the Reserve Bank of Australia under pressure. The unemployment rate dropped from 3.7% in April to 3.5% in May, the lowest it has been in years. This happened as the economy created over 75k jobs in May, higher than the median estimate of 15k. Most of these jobs, ~61.7k, were full-time. The closely watched participation rate jumped to 66.9%.
Strong jobs numbers are a good thing. However, they also make it difficult for the RBA to fight inflation, which remains above 7%. Therefore, there is a likelihood that the bank will decide to hike interest rates by another 0.25% in its July meeting.
The AUD/USD pair also reacted to the weak economic data from China. According to the statistics agency, the country’s retail sales rose by 12.7% year-on-year, lower than the median estimate of 13.7%. Industrial production rose by 3.5%, also lower than the expected 3.8%.
Fixed asset investment rose by 4% while the youth unemployment rate jumped to the highest level in years. Therefore, the country’s central bank decided to cut the rate on the $33 billion medium facility loan.
AUD/USD forecast
The Australian dollar has come under pressure in the past few days. This situation happened when the pair rose to the important resistance point at 0.6815, which was the highest point on May 10th. This price was the higher side of the cup and handle pattern. The current consolidation is part of the handle section.
The bullish trend is being supported by the 50-period moving average while the stochastic oscillator has moved slightly below the overbought level. Therefore, the pair will soon have a bullish breakout, with the next level to watch being at 0.6900.
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