Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6567.
- Add a stop-loss at 0.6485.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6520 and a take-profit at 0.6475.
- Add a stop-loss at 0.6620.
The AUD/USD pair ticked upwards ahead of two important economic numbers from the US and Australia. The pair was trading at 0.6525 on Monday morning, a few points above last week’s low of 0.6480.
US inflation and Australia jobs data
The AUD/USD pair had a relatively calm week as the Reserve Bank of Australia (RBA) delivered its first interest rate decision of the year. The bank left interest rates intact and cautioned investors about rate cut expectations. Most economists expect the bank to maintain rates unchanged and then start cutting mid this year.
There was no other major event last week except the numerous statements by Federal Reserve officials like Jay Powell and Tom Barkin. This week, however, will have some important events that will certainly move the US dollar and the Australian dollar.
The US will publish the important consumer inflation data on Tuesday. These will be crucial numbers because they form part of Fed’s dual-mandate role of ensuring price stability and full employment.
Data has already shown that the labor market is still strong, with the jobless rate sitting at 3.7%. The economy added over 350k jobs in January while wage growth is strong. Therefore, a strong inflation report will point to higher-for-longer rates.
Economists believe that that the headline inflation rose by 2.8% in January, an improvement from December’s 3.4%. Core inflation is expected to come in at 3.8%, lower from December’s 3.9%.
The other important AUD/USD news will be Australia’s jobs report scheduled for Thursday. Economists polled by Reuters expect the data to show that the unemployment rate rose from 3.9% in December to 4.0% in January. They expect that the economy added over 30k jobs, signaling that the labor market is strong.
AUD/USD technical analysis
The AUD/USD exchange rate has bounced back in the past few days. It rose to a high of 0.6525, which was the lowest swing on January 17th. The pair is also inside the 50-period and 25-period Exponential Moving Averages (EMA). Also, the Relative Strength Index (RSI) has pointed upwards, signaling that there is an upward momentum.
Most importantly, the pair is nearing the neckline of the double-bottom pattern at 0.6535. Therefore, the outlook for the pair is neutral with a bullish bias. This means that it could continue rising as buyers target the key resistance at 0.6567 (January 25th low).
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