The pair may soon resume the upward trend since the inverted head and shoulders is usually a bullish sign.
Set a buy stop at 0.7665 (neckline of inverted head and shoulders).
Add a take-profit at 0.7690 (50% Fibonacci retracement).
Set a stop-loss at 0.7600.
Set a sell-stop at 0.7640 and a take-profit at 0.7550.
Add a stop-loss a 0.7750.
The AUD/USD is struggling to find direction a day after the Reserve Bank of Australia (RBA) delivered the latest interest rate decision. It is also reacting to the strong performance of the country’s services sector and the latest IMF economic upgrade.
Australian Dollar Struggling
The Australian dollar is wavering after the RBA left interest rates intact yesterday. The bank signaled that rates would remain at the current level for the next few years in its bid to support the economy. It will also continue with its asset purchases and the yield curve control.
This happened at a time when the Australian economy is on a recovery path as evidenced by the recent flash numbers. Last week, data by Markit and the Australian Industry Group (AIG) revealed that the manufacturing sector did well in March.
Today, numbers revealed that the important Services PMI increased from 53.4 to 55.5. This PMI has remained above the expansionary zone of 50 since February last year. Further data by AIG revealed that the Construction Index rose to 61.8.
The AUD/USD is also struggling a day after the IMF hinted that the global economy will bounce back by 6.6% this year. This will be the fastest recovery since 1988 and will be helped by the ongoing vaccination drive and the recent stimulus packages. It expects that China will grow by 8.4% this year. The Australian economy does well in a period of global growth because it leads to more demand for its commodities.
Meanwhile, the pair is also reacting to the performance of US bonds. The benchmark 10-year yield has dropped to 1.66% after rising to more than 1.72% this week.
AUD/USD Technical Outlook
The AUD/USD pair has moved relatively sideways in the past few days. On the hourly chart, it has formed an inverted head and shoulders pattern, whose head is at 0.7532 and the neckline is at 0.0.7665. The price is currently slightly below this neckline and is at the same level as the 15-day and 25-day moving average. The fast and slow lines of the MACD are above the neutral line also. It is also along the 61.8% Fibonacci retracement level. Therefore, the pair may soon resume the upward trend since the inverted head and shoulders is usually a bullish sign.