Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6880.
- Add a stop-loss at 0.6745.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6775 and a take-profit at 0.6700.
- Add a stop-loss at 0.6850.
The AUD/USD continued soaring after signs of falling Australian inflation and after the Federal Reserve decision. It jumped to 0.6816, the highest point since July 20th. It has soared by over 1.52% from the lowest point this month.
Fed decision and RBA outlook
The Federal Reserve concluded its meeting on Wednesday and decided to hike interest rates by 0.25%. It pushed rates to between 5.25% and 5.50%, the highest level since 2001. This rate hike was in line with what most analysts were expecting.
The decision came at a time when the US has published mixed economic data. Data showed that American consumer confidence rose to 117 as concerns about inflation eased. Further recent numbers showed that the country’s consumer and producer inflation continued falling in June.
The headline consumer price index dropped to 3.0% while core inflation fell to 4.8%. Further, the unemployment rate dropped to 3.6% as the economy added over 209k jobs. Meanwhile, manufacturing PMI numbers for July came in at 49, signaling that it is in a contraction zone.
The next important data that will move the AUD/USD pair will be the upcoming initial and continuing jobless claims. Initial jobless claims are expected to come in at 235k last week. Economists expect the economy grew by 1.8% in the second quarter.
The AUD/USD pair also rose after the latest Australian consumer inflation data. According to the country’s statistics agency, the headline inflation dropped to 6.0% in the second quarter, lower than the expected 6.2%.
The trimmed and weighted mean consumer inflation data dropped to 5.9% and 5.5%, respectively. Therefore, analysts expect the Reserve Bank of Australia (RBA) will leave rates unchanged when it concludes its meeting next week.
AUD/USD technical analysis
The AUD/USD pair has made a strong comeback in the past few days. It has risen above the important resistance point at 0.6791, the highest point on July 26. This price was notable since it was the first resistance of the Woodie pivot point on the hourly chart. The pair has moved above the 25-period moving average.
The Klinger oscillator and the Stochastic Oscillator have drifted upwards. Therefore, the pair will likely continue rising as buyers target the second resistance at 0.6880. The stop-loss of this trade will be at 0.6760.
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