Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6800.
- Add a stop-loss at 0.700.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6930 and a take-profit at 0.7000.
- Add a stop-loss at 0.6850.
The AUD/USD currency pair rebounded in the overnight session as investors reflected on the rebounding commodity prices and the strong Australian retail sales data. It rose to a high of 0.6923, which was higher than this week’s low of 0.6840.
Commodity prices rebound
The AUD/USD price rose modestly as commodity prices crawled back. The closely watched Bloomberg Commodity Index has risen to the highest point since July even as the US dollar index surged to the highest point in over 20 years.
Commodity prices have also risen even after signs emerged that the Chinese economy was slowing. The People’s Bank of China (PBoC) has slashed interest rates several times this month in a bid to stimulate the economy. The Australian dollar is often seen as a proxy for commodities.
The pair also rose after Australia published strong retail sales data. According to the statistics agency, the country’s retail sales rose from 0.2% in June to 1.3% in July. This was the biggest increase in months and it was also bigger than the median estimate of 0.3%. It was also a sign that consumers continued buying even as inflation rose.
Meanwhile, investors believe that the Reserve Bank of Australia (RBA) will continue its hawkish tone until 2023. They expect that the central bank will push the cash rate past the 4% mark in 2023. They expect that the RBA will hike by either 0.50% or 0.75% in next week’s monetary policy meeting.
The next key catalyst for the AUD/USD price will be the upcoming American consumer confidence data. Economists believe that the figure rose modestly in August as gasoline prices continued retreating. Prices have moved from the year-to-date high of $5 to less than $3. The US will also publish the latest house price index data.
AUD/USD forecast
The AUD/USD pair rose slightly in the overnight session and moved slightly above the 0.6900 resistance level. This price was also along the standard pivot point. At the same time, the pair moved below the 25-day and 50-day moving averages. It also moved slightly below the 38.2% Fibonacci Retracement level.
The pair has also formed a head and shoulders pattern. Therefore, the pair will likely continue falling as sellers target the second support of the standard pivot point at 0.6765.
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