Bullish View
Buy the AUD/USD pair and set a take-profit at 0.7550.
Add a stop-loss at 0.7350.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 0.7400 and a take-profit at 0.7300.
Add a stop-loss at 0.7500.
The AUD/USD pair rose to the highest level since September 7 as investors focused on the ongoing Australian economy reopening and the rising commodity prices. The pair also held steady after last week’s data dump from the US and the ongoing earnings season. It is trading at 0.7420, which is about 3.50% above the lowest level in September.
Earnings Season and Australia Reopening
The Australian economy is expected to see more economic growth as the country reopens. The Victorian lockdown will end later this week while New South Wales (NSW) is also expected to reopen. This is after the government hit its 80% vaccination rate. The country’s travel bubble with New Zealand is also expected to reopen, which will see more business activity.
This trend means that the country will soon reverse some of the losses made in the previous months. During this period, the country has lost hundreds of thousands of jobs and analysts expect the upcoming data to show that the GDP contracted in the third quarter. The AUD/USD will next react to the minutes of this month’s Reserve Bank of Australia (RBA) minutes that will come out on Tuesday.
Meanwhile, the American earnings season will continue this week. Data compiled by FactSet showed that 8% of all companies in the S&P 500 index have already published their quarterly results. 80% of all these companies have published stronger-than-expected results. For example, big banks like Morgan Stanley, JP Morgan, Citigroup, and Goldman Sachs released strong results.
The economic calendar will be relatively easy this week. Besides, the RBA has already delivered its decision while the American government has already released the latest employment, inflation, and retail sales. The FOMC minutes have also shown that the bank is committed to start tightening.
AUD/USD Forecast
The AUD/USD pair has made a strong recovery in the past few days. This recovery happened after the currency pair moved slightly above the neckline of the inverted head and shoulders pattern at 0.7312. The pair also rose above the Ichimoku cloud and the 25-day and 50-day moving averages. Oscillators like the Relative Strength Index (RSI) and the MACD have also held steady.
Therefore, the path of the least resistance for the pair is to the upside, with the next key resistance being at 0.7500. This view will be invalidated if the price moves below 0.7380.
