Bearish view
- Sell the AUD/USD exchange rate and set a take-profit at 0.6350.
- Add a stop-loss at 0.6550.
- Timeline: 1-2 days.
Bullish view
- Buy the BTC/USD pair and set a take-profit at 0.6550
- Add a stop-loss at 0.6350
The AUD/USD exchange rate was stuck in a tight range at an important support level as investors waited for the upcoming Australian consumer inflation report. The pair was trading at 0.6463, a few points about last week’s low of 0.6430.
Australia Consumer Inflation Data Ahead
The AUD/USD exchange rate has retreated in the past few months as the US Dollar Index (DXY) jumped to a high $100.6, up from the year-to-date low of $96.2.
The pair will be in the spotlight in the next few days as investors focus on the upcoming Australian monthly report. Economists expect the report to show that the headline Consumer Price Index (CPI) rose from 3.5% in September to 3.6% in October.
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The trimmed and weighted mean consumer inflation are expected to come in at 3.2% and 3.0%, respectively. If these numbers are accurate, there is a likelihood that the Reserve Bank of Australia (RBA) will opt to leave interest rates unchanged in the next meeting in December this year.
Meanwhile, the pair will react to the upcoming economic numbers from the United States. The Conference Board will publish the latest consumer confidence report, which will provide more color on the health of the American consumer.
Economists polled by Reuters expect the data to show that consumer confidence dropped slightly in November to 93.5 from 94.6 in October this year. A decline in consumer confidence is a sign that the economy is slowing.
The AUD/USD exchange rate will also react to the upcoming US retail sales, pending home sales, and the Richmond Fed manufacturing index. These numbers will provide more information about the health of the American economy and what to expect in the next Federal Reserve monetary policy meeting.
AUD/USD Technical Analysis
The AUD/USD exchange rate has come under pressure in the past few days, moving from a high of 0.6706 to the current 0.6465.
It has moved below the 50-day and 200-day Exponential Moving Averages (EMA). Also, the pair has formed a head-and-shoulders pattern, which is one of the most common bearish reversal pattern.
Therefore, the most likely scenario is where the pair continues falling, potentially to the next key support level at 0.6350. A move above the key resistance level at 0.6550 will invalidate the bearish outlook.
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