Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6400.
- Add a stop-loss at 0.6517.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6480 and a take-profit at 0.6550.
- Add a stop-loss at 0.6400.
The AUD/USD exchange rate tilted downwards on Monday as traders repositioned for the upcoming interest rate decision by the Reserve Bank of Australia (RBA). The pair retreated to a low of 0.6450, a few pips below last Friday’s high of 0.6523.
RBA decision preview
The AUD/USD pair retreated after the US published mixed jobs numbers. Data by the Labor Statistics revealed that the economy added over 180k jobs in August after adding 154k in the previous month.
Despite the addition, the unemployment rate rose to a multi-month high of 3.8% while wage growth continued slowing down. Following these jobs numbers, most analysts believe that the Fed will leave interest rates unchanged in its meeting this month.
Besides, recent numbers have shown that the economy is losing momentum. The manufacturing sector continued to contract in August while consumer confidence has slipped.
The next important AUD/USD news will be the upcoming RBA interest rate decision set for Tuesday morning. Most economists believe that the RBA will leave interest rates unchanged at 4.10%.
The pause will be warranted since Australia’s and China’s economies are struggling. China, its biggest trading partner, is slowing down across the board, with retail spending, industrial output, and manufacturing production weakening. Youth unemployment rate has soared to the highest level in years.
At the same time, Australia’s inflation is dropping at a faster pace than expected. Data published last week revealed that the country’s inflation dropped to the lowest level in 17 months in July.
At the same time, the closely watched wage growth figure also rose at a slower pace than expected in the second quarter. Therefore, a pause will give the RBA a chance to assess the trends on inflation and economic growth.
AUD/USD technical analysis
The AUD/USD exchange rate drifted downwards on Friday after the latest US jobs numbers. On the four-hour chart, the decline happened after the pair retested the upper side of the ascending channel shown in black. It has moved slightly below the 50-period moving average and is now slightly above the lower side of the channel.
The MACD and signal lines have also made a bearish crossover. Therefore, the pair will likely continue falling as sellers target the next key support level at 0.6400. The stop-loss of this trade will be at 0.6500.
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