Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6500.
- Add a stop-loss at 0.6360.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6380 and a take-profit at 0.6300.
- Add a stop-loss at 0.6450.
The AUD/USD pair rebounded as the US dollar index (DXY) sell-off eased during the American session. The pair surged to a high of 0.6413 during the American and Australian sessions.
Risk-off sentiment resumes
The AUD/USD pair bounced back as the US dollar index (DXY) retreated as the risk-off sentiment resumed. The index dropped to $105.70 on Tuesday, a few points below last week’s high of $107.
It retreated as American and Australian stocks bounced back. The S&P/ASX 200 index rose by 0.50% on Tuesday while the Dow Jones and the S&P 500 rose by 180 and 25 points, respectively.
The rally continued rising after Hamas said it was willing to call a truce with Israel, a move that could stop the ongoing hostilities. It is unclear whether Israel will accept the truce as it continues with airstrikes in Gaza.
The AUD/USD pair rose since these wars tend to have a minimal impact on the financial market. In most cases, as we saw with Ukraine’s invasion, the reaction is usually strong and then it moderates.
The pair continued rising after two Fed officials hinted that the bank will proceed carefully in the coming meetings. In a statement, Fed’s vice chairman, Philip Jefferson noted that the bank was concerned about the tightening market conditions. This view was also shared by Lorie Logan, the head of the Dallas Fed.
There is no economic data scheduled on Tuesday. The key events to watch will be the upcoming statements by key Fed officials like Raphael Bostic and Christopher Waller. These officials will deliver their first comments since the US published mixed jobs numbers on Friday.
Looking ahead, the AUD/USD pair will react to the upcoming Federal Reserve minutes and US consumer inflation data.
AUD/USD technical analysis
The Australian dollar continued rising on Tuesday morning. It rose to a high of 0.6410, the highest level since October 2nd. It flipped the important resistance at 0.6360 (September 6th low) into a support.
The pair also rose above the 25-period and 50-period moving averages while the MACD moved above the neutral point. Therefore, the pair will likely continue soaring as buyers target the key resistance at 0.6465, the highest swing on September 22nd. A move above that level will see it rise to 0.6500.
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