Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6735.
- Add a stop-loss at 0.6545.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6610 and a take-profit at 0.6550.
- Add a stop-loss at 0.6700.
The AUD/USD pair continued rising as commodity prices bounced back and as investors waited for the upcoming US inflation report. The exchange rate rose to 0.6645 on Wednesday morning, its highest swing since May 8th.
Commodity prices are rising
The Aussie continued bouncing back, helped by the strong performance of commodity prices. Copper, one of the best barometers of global growth, jumped to its highest level in over 15 months.
Similarly, the price of iron ore has moved back above $100 a ton. Gold, a big Australian export, has soared to a record high. This performance is a sign that the Chinese economy is recovering, which is notable since Australia sells most of its goods to the country.
The AUD/USD pair rose ahead of the coming US consumer price index (CPI) data. Economists believe that US inflation remained above 3% in March, which indicates that prices remain significantly high.
The headline CPI is expected to come in at 3.2% while the core consumer price index rose to 3.7%. These figures will be much higher than the Federal Reserve’s target of 2.0%.
Jamie Dimon believes that inflation will remain higher for longer mostly because of services and energy prices. The price of Brent and West Texas Intermediate (WTI) has risen to $90 and $87, respectively. Gasoline prices have moved above $3.5. The EIA will publish the latest US inventory numbers.
The other important news will come from the US where the Fed will publish minutes of the last meeting. These minutes will provide more information about the last meeting and what to expect in the coming meeting.
Federal Reserve officials like Jerome Powell, Raphael Bostic, and Loretta Mester have recently hinted that the bank will be data dependent. Austan Goolsbee, another Fed official is expected to deliver a speech on Wednesday.
AUD/USD technical analysis
The AUD/USD exchange rate has bounced back in the past few days. This rebound happened after the pair tested the ascending trendline. It has moved above the first resistance point of the Woodie pivot point. Also, the pair has rebounded above the 50-day moving average, which is a bullish signal.
Meanwhile, the Relative Strength Index (RSI) has jumped above the neutral point of 50. The Percentage Price Oscillator (PPO) has moved above the zero line. Therefore, more upside will be confirmed if the price moves above the resistance at 0.6645, its highest swing on Tuesday. If this happens, the next point to watch will be at 0.6735, the second resistance of the Woodie pivot point. The alternative scenario is where it retreats and retests the pivot point at 0.6540.
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