Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6250.
- Add a stop-loss at 0.6350.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6330 and a take-profit at 0.6385.
- Add a stop-loss at 0.6250.
The AUD/USD exchange rate has moved sideways this month as the US dollar index (DXY) continued rising. The pair is still hovering near its lowest level this year after falling by over 115 from its YTD high. It has slipped by over 21% from the highest level during the Covid-19 pandemic.
US GDP and Australian inflation ahead
The AUD/USD has been quite flat in the past few weeks as the US dollar index rose. The DXY, which tracks the greenback against a basket of currencies, has soared from the year-to-date low of $99.5 to $107.50.
It has rallied as investors remain concerned about the state of the global economy. A war is going on in the Middle East while the bond market has been in turmoil. The 30-year and 10-year Treasuries slumped to the lowest level in more than two decades last week.
Looking ahead, the pair will react to several important events in the market. For example, Jerome Powell will deliver a speech on Wednesday. In it, he will likely maintain the balance he did last week.
Powell believes that the US inflation was still too high. While this means another rate hike is likely, he also warned about the risks posed by the ongoing geopolitical issues such as the ongoing Israel-Hamas and Ukraine-Russia war.
The other important US news will be the first estimate if the US GDP data. Economists expect the data to show that the economy did well in the last quarter. Precisely, they see it expanding by 4.3%.
In Australia, the statistics agency will publish the closely watched consumer inflation report on Wednesday. Hopes are that inflation dropped again in the third quarter, falling from 6.2% to 5.3%.
Like we saw last week, the focus among investors will be on the energy sector, where higher oil prices, lead to fears of inflation. This, in return, led to concerns about the bond market.
AUD/USD technical analysis
The AUD to USD pair has moved sideways in the past few weeks. On the 4H chart, the pair has moved slightly below the 50-period exponential moving average (EMA). It has also formed a symmetrical triangle pattern.
The pair has also drifted upwards above the lower side of this triangle while the MACD has moved below the neutral point. Therefore, the pair will likely remain in this range on Monday, with the key support and resistance points to watch being at 0.6250 and 0.6350.
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