Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6450.
- Add a stop-loss at 0.6650.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6580 and a take-profit at 0.6650.
- Add a stop-loss at 0.6500.
The AUD/USD exchange rate price continued its sell-off as US bond yields bounced back during the American session. The pair retreated to 0.6557, a few points below last week’s high of 0.6612. It has fallen by 4.5% from its highest point this year.
US GDP data ahead
The AUD/USD pair retreated as the US dollar index bounced back ahead of the key economic numbers scheduled for Thursday and Friday. The country’s statistics agency will publish the latest GDP numbers that will provide more color about the state of the economy.
Economists polled by Reuters expect the report to show that the economy expanded by 2.0% in the fourth quarter after growing by 5.2% in Q4. These numbers will confirm that the American economy is doing modestly well.
Recent numbers showed that inflation has cooled from the pandemic-era high of 9.1% to 3.4% while the unemployment rate has remained at 3.8%. Wage growth has been relatively strong as well as employers competed for workers.
The other key data that will come out on Thursday will be durable goods, building permits, and initial jobless claims numbers. Economists believe that these numbers did well in December. As a result, with inflation still above the Fed’s target of 2.0%, analysts expect the Fed will maintain rates intact when it meets in January and March.
There will be no major economic report on Wednesday. The only one to watch will be the flash US manufacturing and services PMI numbers by S&P Global. According to Investing, the median estimate for the manufacturing PMI is 48, a slight improvement from December’s 47.9. The services PMI is expected to come in at 51, signaling that it is growing.
AUD/USD technical analysis
This week, the AUD/USD pair formed a small double-top pattern at 0.6612. This pattern is a popular sign of a reversal. It has now moved slightly below the 50-period and 25-period Exponential Moving Averages (EMA).
The pair has also flipped the 50% Fibonacci Retracement point while the Relative Strength Index (RSI) and the Money Flow Index (MFI) index have pointed downwards. Therefore, the outlook for the pair is bearish, with the initial support to watch being last week’s low at 0.6522. A beak below that level will see it retreat below the psychological point at 0.6500.
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