Bearish view
Bullish view
- Set a buy-limit order at 0.6895 and a take-profit at 0.6983.
- Add a stop-loss at 0.6800.
The AUD/USD plunged below the neckline of the double-top pattern after the spectacular American jobs numbers. It fell to a low of 0.6921, the lowest level since January 20 as the US dollar index surged. The pair has crashed by over 3% from its highest point last week.
Reserve Bank of Australia (RBA) decision
The AUD/USD price crashed hard after the Bureau of Labor Statistics (BLS) caught the market by surprise. In its monthly report, the bureau said that the American economy added ovr 517k jobs in January, a higher figure than the median estimate of 185k. The unemployment rate dropped to 3.4%, the lowest level in over 50 years.
These numbers came a day after the Federal Reserve made its first decision of the year. In it, the bank hiked interest rates by 0.25%, the lowest hike in a few months. It had hiked by 0.50% in December and by 0.75% in the previous four meetings. Therefore, with the labor market being strong, analysts now expect that the Fed will maintain a hawkish tone for longer.
The next key catalyst for the AUD/USD pair will be the upcoming interest rate decision by the Reserve Bank of Australia (RBA). In this decision, economists expect that the RBA will deliver a 0.25% rate hike and move the official cash rate to 3.35%. It will then signal that it will now pause as it observes trends on inflation.
The decision comes a few days after a survey showed that most economists expect the bank to maintain high rates throughout the year. They don’t expect the bank to slash rates this year.
AUD/USD forecast
The AUD/USD price has been in a remarkable rally in the past few months. It rose by 7% from the lowest level in January to its peak last week. Most recently, it formed a double-top pattern around the resistance point at 0.7145. This pattern is usually accompanied by a bearish breakout. The pair moved below the neckline of this pattern at 0.6983 (January 31st low).
It also dropped below the lower side of the ascending channel shown in black and moved to the lower side if the Bollinger Bands. The pair has moved below the 25-period moving average. Therefore, the pair will likely drop and retest the support at 0.6892 (December 13 high) and then retest the resistance point at 0.6983.
Ready to trade our daily Forex signals? Here’s are the best currency trading platforms in Australia worth checking out.