Bullish View
- Buy the AUD/USD pair and set a take-profit at 0.7200.
- Add a stop-loss at 0.7080.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 0.7115 and a take-profit at 0.7050.
- Add a stop-loss at 0.7200.
The AUD/USD pair retreated slightly as investors continued worrying about the ongoing crisis in Ukraine and the rising global inflation. It is trading at 0.7130, which is about 1.65% below the highest level last week.
US Dollar Strength
The AUD/USD declined mostly because of the rising US dollar as the risks from Ukraine continued escalating. Indeed, the prices of most assets like stocks declined sharply on Friday after the US published new intelligence suggesting that Russia was prepared to attack as soon as possible.
In Wall Street, the Dow Jones and Nasdaq 100 declined by more than 400 points while the broader S&P 500 Index slipped by about 80 points. Worries of an invasion also dragged the prices of cryptocurrencies, with Bitcoin and Ethereum shedding more than 2%. Most coins rebounded during the weekend.
The AUD/USD pair also retreated even as the prices of most commodities jumped. Brent, the global benchmark of crude oil jumped to $95 while West Texas Intermediate (WTI) rose to $93.9. Natural gas prices rose to almost $4 while industrial metals like copper and aluminum also rose. Therefore, there are concerns that inflation in the US and Australia will keep soaring in the coming days.
This week, the key drivers for the AUD/USD pair will be geopolitical events between Western countries and Russia. If the crisis escalates, the pair will retreat as investors move to the US dollar, which is seen as a safe haven.
On economic data, the Australian government will publish the latest jobs numbers. Analysts expect the data to show that the country’s unemployment rate declined to 4.1%. Other key numbers to watch this week will be the latest US industrial and manufacturing production data and retail sales.
AUD/USD Forecast
The AUD/USD pair retreated sharply last week as geopolitics continued. The pair is trading at 0.7130, which is about 1.65% below its highest level last week. It has moved slightly below the 50% Fibonacci retracement level.
The pair is slightly above the lower line of the ascending channel and is between the middle and lower line of the Bollinger Bands. It has also moved slightly below the 25-day moving average.
Therefore, the pair will likely bounce back on Monday as investors buy the dip. If this happens, the next key level to watch will be at 0.7200.
