Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6500.
- Add a stop-loss at 0.6565.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6625 and a take-profit at 0.6700.
- Add a stop-loss at 0.6500.
The AUD/USD pair price was flat on Tuesday morning as focus remained on the upcoming US consumer confidence and NFP data and the Federal Reserve interest rate decision. It was trading at the psychological level of 0.6600, where it has been stuck at in the past few days.
US economic data and Fed decision
The AUD/USD pair remained in a tight range as investors ignored the rising geopolitical risks and worsening situations in China. For example, the price of crude oil continued falling even as the crisis in the Middle East continued.
The US is now considering more actions after three of its soldiers were killed on Sunday. Brent, the global benchmark, retreated by 1.65% to $82.60 while the West Texas Intermediate (WTI) moved to $76.57.
Meanwhile, risks to the Chinese economy continued after Evergrande was ordered to liquidate. While the company has been in a deathbed in the past few years, the liquidation could lead to more challenges for Australia’s biggest market.
Looking ahead, the key catalysts for the AUD/USD pair will be the upcoming US economic numbers and Fed decision. On Tuesday, the US will publish the latest consumer confidence, housing, and JOLTs job openings numbers.
Economists expect the data to show that consumer confidence rose to 115 in January. High confidence is a good report since consumer spending is the biggest part of the American economy. Less than two weeks ago, a report by the University of Michigan said that confidence jumped at the fastest pace in years.
The other key US data will come out on Friday when the statistics agency will publish the latest jobs numbers. Before that, the Fed is expected to leave interest rates unchanged between 5.25% and 5.50% on Wednesday. The pair will react to the bank’s guidance of what to expect in the coming meetings.
AUD/USD technical analysis
The AUD to USD pair remained in a tight range in the past few days. It has formed an ascending channel and a bearish flag pattern. In most cases, this pattern is one of the most bearish signs in the market. It has retreated below the 50-period moving average while the Relative Strength Index (RSI) has formed an ascending channel.
Therefore, the outlook for the pair is bearish, with the next reference level to watch being the psychological point at 0.6500. The stop-loss of this trade is at 0.6525.
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