The pair will likely break out higher as bulls target the key resistance level at 0.7350. On the flip side, a drop below 0.7230 will invalidate this view.
- Buy the AUD/USD and set a take-profit at 0.7350.
- Add a stop-loss at 0.7200.
- Timeline: 1-2 days.
- Set a sell-stop at 0.7250 and a take-profit at 0.7150.
- Add a stop-loss at 0.7350.
The AUD/USD tilted higher as investors cheered the ongoing vaccination progress in Australia and the reopening plan in New South Wales (NSW). The pair rose to 0.7290, which was slightly above last week’s low of 0.7240.
Australia Covid Progress
The Australian government has made a lot of progress on delivering inoculations to Australians. Vaccine trackers say that New South Wales, Victoria, and ACT will likely reach 90% full adult vaccinations this year. This is a faster rate than what most analysts were expecting. Some states will reach this threshold as soon as next month.
This is an important sign of progress because scientists believe that vaccinations provide the best approach to fight the Covid pandemic. At the same time, Gladys Berejiklian, NSW premier, has said that her government will start to reopen soon. This reopening will likely lead to more business and consumer activity.
The AUD/USD also rose after a strong recovery of commodity prices. The price of crude oil jumped to almost $80 in the overnight session while metals like copper and iron ore rose as well. This rally happened as fears of Evergrande’s collapse waned. Commodity prices are important because of the volume that Australia exports every year.
Meanwhile, today, focus will be on the United States, where the Conference Board will publish the latest consumer confidence data. These are important numbers because of the importance of the American consumers on the American economy. While still low, analysts expect that the country’s consumer confidence made some modest recovery in September.
The other important event will be Jerome Powell’s testimony. In it, he will likely talk about last week’s interest rate decision and the impact of a potential government shutdown. Other key numbers this week will be the final estimate of the country’s second-quarter GDP data.
The 4H chart shows that the AUD/USD price moved above the upper line of the descending channel pattern last week. It then retested that line on Friday, in what seems like a break and retest approach. The pair has also moved above the 25-day and 50-day moving averages while the Stochastic Oscillator has been rising. The price is also slightly above the Ichimoku cloud.
Therefore, the pair will likely break out higher as bulls target the key resistance level at 0.7350. On the flip side, a drop below 0.7230 will invalidate this view.