Bearish view
- Set a sell-stop at 0.6506 and a take-profit at 0.6450.
- Add a stop-loss at 0.6550.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6525 and a take-profit at 0.6600.
- Add a stop-loss at 0.6450.
The AUD/USD pair caved hard as traders embraced a risk-on sentiment after the recent Federal Reserve decision. The pair tumbled to a low of 0.6515 on Monday after rising to a weekly high of 0.6635.
US consumer confidence data ahead
The AUD/USD pair retreated sharply as the US dollar index (DXY) rebounded. The index soared by 0.45% to $104.11, its highest point since February 16th. It has jumped by over 2% from its lowest point this month.
The US dollar rallied after last week’s Fed interest rate decision. In it, the bank decided to leave rates unchanged between 5.25% and 5.50%. It also signalled that it would start cutting rates later this year. The dot plot pointed to three rate cuts starting from June.
Analysts expect that the Fed may deliver fewer than three rate cuts this year. The economy is doing well, with the unemployment rate being at 3.9%. It has added millions of jobs in the past few months.
The next important AUD/USD news will be the upcoming US building permits and housing starts data. Economists polled by Reuters expect the report to show that building permits rose to 1.51 million while housing starts soared to 675k.
There will also be some important statements from Raphael Bostic and Lisa Cook. Bostic is the head of Atlanta. In a recent statement, Bostic said that he expects that the bank will deliver just one rate cut this year.
The other important data to watch will be the upcoming US consumer confidence data set for Tuesday. Economists expect the data to show that confidence rose slightly to 106.9 in March after falling to 106.6 in February. The AUD/USD pair will also react to the latest US durable goods and house price index.
AUD/USD technical analysis
The AUD/USD pair retreated sharply as the US dollar index rebounded. It crashed from last week’s high of 0.6635 to a low of 0.6515. The pair has remained slightly above the ascending trendline, which connects the lowest swing since February 13th.
It has also dropped below the 50-period Arnaud Legoux Moving Average (ALMA). Also, the pair retreated below the Woodie pivot point and the Ichimoku cloud.
Therefore, the outlook for the AUD/USD pair is neutral. More downside will be confirmed when it crosses the crucial support at 0.6500, its lowest point on March 19th. A move below that level will point to more downside, with the next point to watch being at 0.6450.
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