Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6487.
- Add a stop-loss at 0.6376.
- Timeline: 1-2 days.
Bearish view
- Set a sell order and add a take-profit at 0.6376 (YTD low).
- Add a stop-loss at 0.6455.
The AUD/USD exchange rate remained in a consolidation phase on Tuesday ahead of the upcoming US consumer confidence data. It was trading at 0.6425, a few pips above last week’s low of 0.6381.
US economic data ahead
The AUD/USD price reacted mildly to the latest actions by Chinese authorities to boost the economy. In one measure, the Ministry of Finance halved the stamp duty on all stock purchases in a bid to invigorate the capital markets.
Authorities are also considering more measures to support an economy that is showing signs of strains. For example, key areas like exports, imports, industrial production, and manufacturing output have all retreated in the past few months.
China and Australia have a long mutual relationship. Australia sells most of its goods and commodities to Australia. It also receives most of its tourists from the country. Therefore, the ongoing China weakness will have an impact on Australia’s recovery.
The AUD/USD pair will react to several important economic numbers from the United States. The most important report will come from the Conference Board, which will publish the latest consumer confidence data.
Economists polled by Reuters expect that confidence dropped slightly from 117 in July to 116 in August. This decline will likely be because of the rising gasoline prices and interest rate payments.
The Bureau of Labor Statistics (BLS) will deliver the JOLTs job openings data. Economists see the number of openings rising from 9.582 million in July to 9.793 million in July. These numbers will come a few days ahead of the upcoming non-farm payrolls (NFP) data.
The AUD/USD pair will also react mildly to the latest US house price index (HPI) data. House prices have held quite well in the past few months because of the tight supplies.
AUD/USD technical analysis
The AUD to USD exchange rate has been in a strong bearish trend after forming a double-top pattern at 0.6893 in June and July. Most recently, the pair has formed a small double-bottom pattern at 0.6376, the lowest point in August. It has moved slightly below the 25-period and 50-period moving averages.
Therefore, the pair’s outlook is neutral for now. The first alternative is where the pair bounces back and retests the double-bottom’s neckline at 0.6487. On the other hand, a retest of the year-to-date low at ~0.6376 cannot be ruled out.
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