Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6540.
- Add a stop-loss at 0.6620.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6680 and a take-profit at 0.6750.
- Add a stop-loss at 0.6600.
The AUD/USD pair pulled back slightly after the strong US jobs numbers. After rising to a high of 0.6620 on Friday, the exchange rate retreated to a low of 0.6575. The focus now shifts to the upcoming US inflation data and FOMC decision,
US inflation and Fed decision ahead
The AUD/USD exchange rate pulled back after data revealed that the American labor market was doing well. According to the Bureau of Labor Statistics (BLS), the economy added over 190k jobs in November, higher than October’s 150k.
The unemployment rate dropped to 3.7% while wages continued rising. The wage growth of 4.0% was higher than the country’s inflation, which stood at 3.2% in October.
These numbers are important because they came a few days before the US is set to release the latest inflation data. Economists polled by Reuters expect the data to reveal that the headline CPI dropped to 3.1% in November.
They also believe that the core inflation remained unchanged at 4.0%, much higher than the Fed target of 2.0%. With gasoline prices falling, there are chances that inflation fell at a faster pace than expected.
The FOMC will start its two-day meeting on Tuesday and make its decision on Wednesday. Based on the recent statements, most analysts believe that the Fed will leave interest rates unchanged between 5.25% and 5.50%.
The decision itself will not have an impact on the US dollar. Instead, the currency will react to the dot plot, which will provide more information about the pace of rate hikes or cuts. Most economists see the bank starting to cut rates in the first half of the year.
The other important AUD/USD news will be the upcoming Australia jobs data scheduled for Thursday. These numbers are expected to show that the unemployment rate remained at 3.8% while the participation rate rose to 66.9%.
AUD/USD technical analysis
The Australian dollar retreated after the latest US jobs numbers. On the 4H chart, the pair retreated below the 23.6% Fibonacci Retracement level. It also dropped below the 50-period moving average. The pair has also moved between the first and second support levels of the Woodie pivot point.
Also, the Relative Strength Index (RSI) has dropped below the neutral point at 50. Therefore, the outlook for the pair is bearish, with the next support level being at 0.6500.
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