Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6580.
- Add a stop-loss at 0.6500.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6525 and a take-profit at 0.6450.
- Add a stop-loss at 0.6580.
The AUD/USD pair rose last week as the US dollar ended its recent comeback. It was the first weekly gain in three weeks. It was trading at 0.6530 on Monday, a few points below last Friday’s high of 0.6553.
The focus remains on the US
The AUD/USD pair’s price action was because of the falling geopolitical risks. Israel and Iran made no retaliations last week while Secretary Anthony Blinken had a long conversation with Xi Jinping.
The pair also reacted to important economic numbers from the United States. On Thursday, the Bureau of Economic Analysis (BEA) said that the economic growth in the first quarter was weaker than expected.
It expanded by 1.6% in Q1, lower than the expected growth of 2.5%. It was also weaker than the previous growth of 3.4%. A separate figure that strips out inventories, trade, and government spending grew by 3.1%, signaling that the economy is still doing well.
Another report revealed that the country’s inflation was still stubbornly high. The headline Personal Consumption Expenditure (PCE) rose to 2.7% in March, an increase from the previous month’s 2.5%.
The core PCE rose to 2.8%, which is higher than the Fed’s target of 2.0%. The two figures rose by 0.3% on a MoM basis.
These are important numbers because they are more comprehensive than the Consumer Price Index (CPI). The CPI looks at inflation in urban centers while the PCE looks at change in prices in urban and rural areas. It also looks at more products and services.
The next important AUD/USD news will be the Federal Reserve interest rate decision on Wednesday and the non-farm payrolls (NFP) report on Friday. The other important economic events will be the JOLTS jobs numbers, global PMIs, and China’s trade figures.
AUD/USD technical analysis
The AUD/USD pair peaked at 0.6553 last week and then pared back some of those gains on Friday. That was an important level since it was slightly above the 61.8% Fibonacci Retracement level. The 50-period and 25-period exponential moving averages have made a bullish crossover.
It has also jumped above the important support level at 0.6480, its lowest swing on April 1st. The pair’s Relative Strength Index (RSI) has formed a bearish divergence pattern. Therefore, the pair will likely remain in this range on Monday. A break above the crucial resistance at 0.6553 will point to more upside.
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