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AUD/USD Forex Signal: Steady Ahead of Jay Powell Testimony

Bullish view

  • Buy the AUD/USD pair and set a take-profit at 0.6800.
  • Add a stop-loss at 0.6685.
  • Timeline: 1-2 days.

Bearish view

  • Set a sell-stop at 0.6725 and a take-profit at 0.6685.
  • Add a stop-loss at 0.6800.

AUD/USD Signal Today - 09/07: Steady Before Powell (Chart)

The AUD/USD exchange rate continued rising this week amid a persistently weak US dollar. It rallied to 0.6758 on Tuesday morning, its highest point since January 3rd this year. It has jumped by 6.25% from its lowest point in May.

Jerome Powell statement

The AUD/USD pair has been in a strong bullish trend in the past few weeks after signs of a potential divergence between the Fed and the Reserve Bank of Australia (RBA) rose.

The recent RBA minutes showed that the committee considered hiking interest rates in the last meeting. Such a move would have been a difficult one since most central banks are now thinking about when the next rate cut would happen.

The RBA is concerned about the country’s substantially high inflation rate, which has constantly avoided its 2% target. The most recent data showed that the headline consumer price index rose to 3.6%.

Still, it is unlikely that the RBA will cut rates. Instead, the bank will likely leave interest rates unchanged for longer.

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    On the other hand, the Federal Reserve could start cutting interest rates later this year as the economic slowdown continues. The recent economic data showed that the ISM manufacturing and non-manufacturing PMI data dropped to the contraction zone.

    The US also published a weak jobs report on Friday. According to the statistics agency, the unemployment rate rose to 4.1% even as the economy added over 201k jobs. Therefore, analysts expect that the Fed will cut interest rates as soon as in September.

    The next key catalyst to watch on Tuesday will be the upcoming Jerome Powell testimony to congress on inflation. This testimony will come two days ahead of the upcoming US inflation report.

    In his recent statements, Powell has insisted that the Fed would be patient when determining when to start cutting rates.

    AUD/USD technical analysis

    The AUD/USD exchange rate has continued rising this week as the US dollar retreated. It rose to a high of 0.6760, its highest point since January 3rd. It has moved slightly above the key resistance point at 0.6712, its highest level on May 16th.

    The pair has formed an inverse head and shoulders pattern and moved slightly above the 50-day moving average. Also, the Relative Strength Index (RSI) has moved slightly below the overbought level. The Stochastic oscillator has risen above the overbought level.

    Therefore, the pair will likely continue rising as buyers target the psychological point at 0.6800.

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    Crispus Nyaga
    About Crispus Nyaga
    Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
     

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