Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.7200.
- Add a stop-loss at 0.6940.
- Timeline:1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6940.
- Add a stop-loss at 0.7200.
The AUD/USD exchange rate pulled back slightly from the year-to-date high of 0.7160. It retreated to a low of 0.7072 as investors waited for the upcoming Australian jobs report and the Federal Reserve minutes.
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RBA and Fed Minutes and Australian Jobs Data
The AUD/USD pair retreated after the Reserve Bank of Australia published minutes of the last monetary policy meeting. Those minutes provided the rationale in which officials delivered the last monetary policy decision in which they hiked interest rates.
The minutes showed that officials remained concerned about the country’s inflation, which has remained at an elevated level in the past few months. The most recent report showed that the headline and core inflation continued rising in December.
Therefore, there is a likelihood that the RBA will either maintain high interest rates in the coming meetings or leave them at an elevated level.
The next key catalyst for the pair will be the upcoming Wage Price Index (WPI) on Wednesday and the jobs numbers. A report showed that the economy created 54k jobs in January, while the unemployment rate rose to 4.2%.
The AUD/USD pair will also react to the upcoming statement from Mary Daly, a top Federal Reserve official. She will comment on the recent macro data from the US, which showed that the headline Consumer Price Index dropped to 2.4% in January.
The Federal Reserve will publish minutes of the last monetary policy meeting on Wednesday. These minutes will provide more information about the last meeting and what to expect in the coming meetings.
AUD/USD Technical Analysis
The three-day chart shows that the AUD/USD pair has been in a strong uptrend in the past few months, moving from a low of 0.5905 in April last year to the current 0.7035.
It has remained above the key resistance level at 0.6940, its highest level on September 25 last year. The pair recently formed a golden cross as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other.
The two lines of the Percentage Price Oscillator (PPO) have continued rising in the past few months and is at its highest level in over a year.
Therefore, to most likely scenario is where the pair continues rising as bulls target the next key psychological level of 0.7200. The alternative scenario is where the pair retreats and retests the support level at 0.6940.