Bullish View
Buy the AUD/USD and add a take-profit at 0.7230.
Add a stop-loss at 0.7100.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 0.7100 and a take-profit at 0.7000.
Add a stop-loss at 0.7200.
The AUD/USD price bounced back as the US dollar retreated for the first time in six days. The pair rose to 0.7160, which was substantially higher than last week’s low of 0.7100.
Australia Flash PMIs
The Australian economy has been hit by the new wave of the COVID pandemic that has pushed some states to move into lockdown.
In a report today, the New South Wales government confirmed more than 800 new cases and higher hospitalization. At the same time, the government is ramping up its vaccination drive and is working to achieve its goal of vaccinating about 10% of the population soon.
The impact of the new COVID wave on the Australian economy emerged after Markit published the latest Flash Manufacturing and Services PMI numbers. The Manufacturing PMI declined from 56 in July to 51.7 in August while the Services PMI declined from 44.2 to 43.3. The Services PMI sector has been affected more because businesses like hotels, restaurants, and tourism have been out of business in some states.
The AUD/USD pair will next react to the latest American Flash PMI numbers that will come out in the afternoon session.
The country will also release the latest existing-home sales numbers. Analysts expect the data to show that existing home sales declined from 5.86 million in June to 5.81 million in July. Last week, data showed that the country’s building permits rose in July while housing starts turned lower. The housing market is still seeing higher demand while builders are facing the challenge of higher costs.
Meanwhile, the AUD/USD rose as the market anticipated the upcoming Jackson Hole symposium that will take place virtually for the first time on record. Analysts will be watching for cues from key central bank governors.
AUD/USD Analysis
The AUD/USD pair rose from last week’s low of 0.7105 to a high of 0.7160. On the hourly chart, the pair moved above the 25-period EMA and is approaching the 50-period moving average. The MACD, on the other hand, has been rising, with the two averages approaching the neutral level. A closer look shows that the pair has formed a small inverted head and shoulders pattern. Therefore, the pair will likely keep rising as bulls target the 23.6% Fibonacci retracement level at 0.7182 followed by the 38.2% level at 0.7230.
