Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6400.
- Add a stop-loss at 0.6480.
- Timeframe: 1-2 days.
Bullish view
- Set a buy-stop at 0.6460 and a take-profit at 0.6525.
- Add a stop-loss at 0.6350.
The AUD/USD exchange rate moved sideways on Monday as traders started to reposition for the upcoming Federal Reserve decision. The pair was trading at 0.6432, where it has been in the past few days. This price is more than 6% below the highest level in July.
Fed decision ahead
The AUD/USD remained in a tight range last week as traders reacted to important economic numbers from the US, China, and Australia. The most important numbers came out on Wednesday when the US published the latest consumer inflation numbers.
These numbers revealed that the headline consumer price index (CPI) rose from 3.2% in July to 3.7% in August. Core inflation, on the other hand, slipped to 4.3%. Analysts believe that inflation will continue rising now that crude oil prices have jumped to the highest point since November last year.
The other important macro event came out on Thursday when the US published strong retail sales numbers. These numbers meant that the American consumer was still strong despite the rising interest rates.
Therefore, analysts believe that the Federal Reserve will deliver a hawkish pause in its Wednesday meeting. This is where the bank leaves rates unchanged and hints at more rate hikes later this year. The Fed decision will be the most important catalyst for the pair this week.
The AUD/USD pair also reacted mildly to the latest economic numbers from Australia and China. In Australia, the statistics agency said that the unemployment rate remained steady at 3.7% in August as the economy added over 64.9k jobs. The participation rate rose to 67%.
Meanwhile, in China, the biggest Australian trading partner, the National Bureau of Statistics (NBS) said that retail sales, industrial production, and fixed asset investments rose in August.
AUD/USD technical analysis
The AUD/USD attempted to recover last week even as the US dollar index (DXY) jumped to the highest level in months. It rose to a high of 0.6472, the highest level since September 1st. Along the way, the pair formed the red ascending channel and is now at its lower side. It is also oscillating at the 50-period exponential moving average (EMA).
The MACD and signal lines have made a bearish crossover pattern. Therefore, the outlook for the pair is bearish, with the next support level being the psychological point at 0.6400.
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