Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6500.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6550 and a take-profit at 0.6500.
- Add a stop-loss at 0.6600.
The AUD/USD went vertical in the overnight session after Jerome Powell delivered an important speech at Stanford University. The pair soared to 0.6565, much lower than Monday’s low of 0.6480 and its highest point since March 22nd.
Jerome Powell statement
The AUD/USD pair rose sharply as the US dollar index (DXY) slipped after the important speech by Jay Powell, the head of the Federal Reserve. In it, he reiterated that the bank was still thinking about cutting rates at some point this year.
Powell also noted that the recent inflation reports, which revealed that prices were still high did not change the Fed’s view. Still, he expects that the officials have more time to assess economic numbers before deciding when to start cutting.
Powell’s statement came a few hours after Raphael Bostic, the head of the Atlanta Fed, delivered a hawkish statement. Unlike other Fed officials, he expects that the bank will only deliver one increase this year in the fourth quarter.
In separate statements this week, Loretta Mester and Michele Bowman emphasized that the Fed should wait for more data before thinking about cutting rates.
Meanwhile, economic data released this week showed that the economy is still strong. On Monday, a report by ISM showed that the manufacturing sector’s output increased for the first time since 2022.
On Wednesday, the agency said that the non-manufacturing PMI dropped slightly to 51.4, missing the expected 52.8. Still, a reading of 50 and above showed that the sector is still growing.
A report by ADP showed that the labor market was still strong in March. The country’s private sector created over 184k jobs in March, beating the expected 148k.
There will be no important data on Thursday. As such, traders will continue to reflect on the Powell statement as they wait for Friday’s nonfarm payrolls (NFP) numbers.
AUD/USD technical analysis
The AUD/USD pair made a strong bullish breakout during the American session. Before this breakout, it was forming a falling wedge pattern, which is a popular sign of reversal. It rebounded above the 50-period moving average on the 4H chart.
It also jumped above the first resistance of the Woodie pivot point and the Ichimoku cloud. The Relative Strength Index (RSI) has moved close to the overbought level. Therefore, the path of the least resistance for the pair is bullish, with the next point to watch being the second resistance at 0.6590.
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