Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6640.
- Add a stop-loss at 0.6400.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6450 and a take-profit at 0.6350.
- Add a stop-loss at 0.6550.
The AUD/USD price has risen sharply in the past few days. It rose to a high of 0.6510, which was the highest level since October 6 of this year. The Australian dollar has risen by more than 5% from its lowest level this year after the latest inflation data.
Australia inflation data
The AUD/USD pair rose sharply after the latest Australian consumer price index (CPI) data. According to the Bureau of Statistics, the headline consumer price index rose to 1.8%, which was higher than the median estimate of 1.6%.
Inflation rose from 6.1% to 7.3%, which was higher than the median estimate of 7.0%. The weighted and trimmed mean inflation rose by 5.0% and 6.1%, respectively. These were some of the highest levels in more than 32 years.
Therefore, analysts expect that the Reserve Bank of Australia (RBA) will continue hiking interest rates in the coming months. Some believe that it will hike by 0.50% in its next week’s meeting. This will be the seventh straight rate increase.
The AUD/USD pair also rose after the new labor administration delivered its budget for the year. In a statement on Wedneda, Treasurer Chalmers said that the government was open to gas price cap as inflation surges. He argued that forcing prices will be a better option than providing stimulus checks.
The next key catalyst for the pair will be the latest American GDP data. Economists polled by Reuters expect the data to show that the economy emerged from a technical recession by rising by 2.4% in the third quarter.
The US will also publish the latest durable goods orders and initial jobless claims numbers. Durable goods orders are expected to have declined slightly in September.
AUD/USD forecast
The four-hour chart shows that the AUD/USD pair has been in a bullish trend after falling to a low of 0.6160 last week. It moved above the ascending channel shown in blue. Also, the pair managed to move to the second resistance level of the standard pivot point.
Aussie’s bullish trend is supported by the 25-day and 50-day moving averages. The Relative Strength Index (RSI) has moved close to the overbought level. Therefore, there is a likelihood that it will continue rising as buyers target the third resistance at 0.6640. A move below the support at 0.6425 will invalidate the bullish view.
Ready to trade our advanced signals? We’ve made a list of the best brokers to trade Forex worth using.