AUD/USD Forex Signal: Stuck in a Range Amid Fed Pivot Concerns

The AUD/USD price has been in a tight range as the market focuses on the likelihood for a Fed pivot.

Bearish view

  • Sell the AUD/USD pair and set a take-profit at 0.6600.
  • Add a stop-loss at 0.6750.
  • Timeline: 1-2 days.

Bullish view

  • Set a buy-stop at 0.6700 and a take-profit at 0.6800.
  • Add a stop-loss at 0.6600.

The AUD/USD price remained under pressure as investors assessed the likelihood for a Federal Reserve pivot. It also pulled back even after the relatively strong Australian jobs numbers. It was trading at 0.6674, which was lower than this month’s high of 0.6800.

Fed pivot concerns

The AUD/USD price has been in a tight range as the market focuses on the likelihood for a Fed pivot. Hopes that the bank will start slowing the pace of rate hikes increased after the latest US inflation and jobs numbers.

Early this month, numbers revealed that the American unemployment rate rose from 3.5% in September to 3.7% in October. In the same month, inflation cooled from 8.3% to 7.7%. After that, several Fed officials like Loretta Mester and Mary Daly hinted that the bank will start pivoting.

However, some Fed officials warned that the market was getting ahead of itself. In a statement, James Bullard, of St. Louis, said that he will still support higher interest rates in the upcoming meeting in December. Jerome Powell is also believed to be extremely hawkish.

Most analysts now expect that the Federal Reserve will deliver a 0.50% rate hike in the upcoming meeting. If this happens, it will bring the year-to-date rate hikes to 450 basis points, the most in decades.

The AUD/USD price also racted to the latest Australian jobs and wages data. On Thursday, data published by the statistics agency showed that the unemployment rate decline to 3.4% in October, the lowest level in half a century. The economy added over 32k jobs while the participation rat was 66.7%.

Therefore, these numbers, together with the significantly high inflation rate will keep putting pressure on the RBA. The bank has lifted in the seven straight meetings and analysts expect another 25 basis point increase in December.

AUD/USD forecast

The AUD/USD price has been in a tight range in the past few days. It is a few points below the highest level this month. The pair is between the 25-period and 50-period moving averages and is slightly above the Ichimoku cloud. At the same time, the Relative Strength Index (RSI) has moved below the neutral point.

The pair is above the important support level at 0.6520, the highest point on October 27. Therefore, the pair will likely pull back in the next few days as bears target the key support at 0.6600.

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Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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