AUD/USD Forex Signal: Extremely Bearish Below 0.7288

Crispus Nyaga

The AUD/USD pair will likely maintain the bearish trend with the next key target being at 0.7250.

Bearish view

  • Sell the AUD/USD pair and set a take-profit at 0.7250.
  • Add a stop-loss at 0.7380.
  • Timeline: 1-2 days.

Bullish view

  • Set a buy stop at 0.7380 and a take-profit at 0.7450.
  • Add a stop-loss at 0.7300.

The AUD/USD price retreated slightly in early trading after the release of the relatively weak Reserve Bank of Australia (RBA) minutes. The pair fell to 0.7300, which was substantially lower than this month’s high of 0.7425.

RBA Minutes

The RBA concluded its August meeting two weeks ago. As was widely expected, the bank decided to leave interest rates unchanged. It also continued with its asset purchases and warned about the impact of the new wave of the pandemic.

The RBA published the minutes of the meeting. These minutes showed that the members remained concerned about the outbreak of the Delta variant and the subsequent lockdowns in the country. They noted that employment and economic activity were expected to decline in the second half of the year. Their baseline scenario is for unemployment to decline to 4.25% by the end of the year.

Therefore, the AUD/USD pair declined because the minutes pointed to further easing by the country’s central bank. This could include leaving rates at the current level for longer than expected and accelerating asset purchases.

The AUD/USD price action will be determined by the strength or weakness of the American retail sales numbers and a statement by the Federal Reserve chair. Analysts expect that the US retail sales declined in July as prices rose. Last week, data showed that the headline consumer price index (CPI) rose by 5.4% in July.

Therefore, the median estimate is that the headline sales fell by 0.2% in July while core sales retreated from 1.1% to 0.1%. Other economic data from the US will be business inventories, industrial and manufacturing production.

The AUD/USD will also react to the latest statement by Jerome Powell, the Fed chair. He will likely talk about easing of the ongoing asset purchases.

AUD/USD Technical Analysis

The AUD/USD pair declined to 0.7300 in the morning session. Along the way, the pair moved below the key support level at 0.7320, which was the lowest level since July 28. On the 3H chart, it has moved below the 25-period and 15-period exponential moving averages.

A closer look shows that the pair has formed a head and shoulders pattern. The stochastic oscillator moved below the oversold level. Therefore, the pair will likely maintain the bearish trend with the next key target being at 0.7250.

AUD/USD Signal

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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