Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6425.
- Add a stop-loss at 0.6525.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6480 and a take-profit at 0.6550.
- Add a stop-loss at 0.6400.
The Australian dollar continued its strong sell-off even as the prices of industrial metals continued bouncing back. The AUD/USD pair crashed to a multi-month low of 0.6450 on Monday, much lower than this month’s high of 0.6645.
Industrial metals are doing well
The prices of industrial metals continued bouncing back on Monday as expectations of demand continued rising. Copper has jumped to its highest point since 2022. Similarly, iron ore, aluminum, gold, and silver have all bounced back.
This rebound is a sign that the market is hopeful about the global economy after reports released earlier this month showed that manufacturing output expanded in March.
The prices of industrial metals are important for Australia because it is one of the biggest mining countries in the world. Most of its exports are commodities like coal, iron ore, and gold. Most of these exports go to countries like China, Japan, and South Korea.
The AUD/USD pair crashed because of the performance of the US dollar index, which has moved to $106, its highest level in months. It rallied after economic numbers from the US provided hints that the Federal Reserve will not slash interest rates at a faster pace than expected.
Economists have mixed opinions about the next actions by the Federal Reserve. Nonetheless, a broader consensus is that the bank will not deliver as many interest rate cuts as was previously thought.
Some economists believe that a rate cut would be necessary since core inflation is almost double the Fed’s target of 2.0%.
The next important event for the AUD/USD pair will be the upcoming US retail sales, which will come during the American session. These numbers will provide more information about the health of the American consumer.
The pair will also react to the ongoing geopolitical crisis in the Middle East that has pushed oil prices to the highest point in months. The other important economic report will come out on Tuesday when China publishes its economic numbers.
AUD/USD technical analysis
The AUD/USD pair formed a triple-top pattern around the 0.6845 level. It has now crashed below the neckline of this pattern at 0.6480, its lowest swing on April 1st. The pair has also moved below the ascending trendline that connects the lowest swings since February.
It has also crashed below the psychological level at 0.6500, its lowest swing on April 10th. Additionally, the pair has moved below the 50-period Exponential Moving Average (EMA) while the Percentage Price Oscillator (PPO) has dropped below the neutral point.
Therefore, the pair will likely continue falling as sellers target the second support of the Woodie pivot point at 0.6425.
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