Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6900.
- Add a stop-loss at 0.6800.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6800.
- Add a stop-loss at 0.6900.
The Australian dollar continued its strong upward momentum as investors reacted to the latest jobs numbers, which raised odds of an interest rate hike. The AUD/USD pair rose to a high of 0.6900, its highest level since September 24. It has soared by over 16% from its lowest in April last year.
Australian Dollar Jumps Ahead of Inflation Report
The AUD/USD exchange rate continued its strong upward trend after the Australian Bureau of Statistics (ABS) published strong jobs numbers.
The data revealed that the unemployment rate dropped to 4.1% in December from the previous 4.3%. Also, the economy added 65,200 jobs in December last year, higher than what analysts were expecting.
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These numbers raised the possibility that the Reserve Bank of Australia (RBA) will hike interest rates in the coming month as the economy is doing much better than expected.
The next key catalyst for the AUD/USD exchange rate will be the upcoming Australian consumer inflation report. Economists polled by Reuters expect the upcoming report to show that the headline Consumer Price Index (CPI) rose to 3.6% in December from the previous 3.4%.
The trimmed and weighted mean consumer inflation is expected to remain above 3.4%, which is much higher than the bank's target of 2.0%. If these estimates are accurate, chances are high that the bank will hike rates by 0.25%.
The other major catalyst for the pair will be the Federal Reserve interest rate decision, which will come out on Wednesday. Economists expect that the bank will leave interest rates unchanged between 3.50%and 3.75%.
The AUD/USD pair will also react to key macro data from the United States, including the consumer confidence, house price index, and the initial jobless claims.
AUD/USD Technical Analysis
The weekly timeframe chart shows that the AUD/USD exchange rate has been in a strong uptrend in the past few weeks, and is now trading at the highest level since September 2024.
It has moved above the ultimate resistance level of the Murrey Math Lines tool at 0.6835 and the 50-week moving averages.
The Percentage Price Oscillator (PPO) has just crossed the zero line, while the Relative Strength Index is approaching the overbought level.
Therefore, the pair will likely continue rising as bulls target the next key resistance level at 0.6958, which is the overshoot of the Murrey Math Lines.
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