Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7100.
Add a stop-loss at 0.6900.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6900.
Add a stop-loss at 0.7100.
The AUD/USD exchange rate held steady above the key resistance level at 0.7000 on Tuesday as the US dollar pulled back after Donald Trump's reversal on Iranian power attacks. The pair was trading at 0.7025, up from this week's low of 0.6913 ahead of the upcoming Australian inflation report.
Australia Consumer Inflation Report
The AUD/USD pair rose slightly after President Donald Trump retreated on his plan to bomb the biggest Iranian power projects. Iran had threatened to attack top infrastructure of Israel and other countries if its infrastructure was attacked.
As a result, the US Dollar Index (DXY) dropped to $98.8, while crude oil prices tumbled, with Brent and West Texas Intermediate falling to $95 and $87, respectively.
The next important catalyst for the AUD/USD pair will be the upcoming weekly ADP employment report, which is expected to show that the economy added 7k jobs last week.
Also, the pair will react to the upcoming flash manufacturing PMI report by S&P Global. Economists expect the data to show that the manufacturing PMI slipped to 51 from the previous 51.1. The composite PMI is also expected to come in at 50.5 from the previous 51. A PMI data of 50 and above is a sign that a sector is growing.
The most important AUD/USD news will come out on Wednesday when the Australian Bureau of Statistics (ABS) releases the latest consumer inflation report. Economists expect the data to show that the headline Consumer Price Index (CPI) rose 3.8% in February, while the trimmed mean one rose 3.4%.
These numbers come a week after the Reserve Bank of Australia (RBA) decided to hike interest rates by 0.25%, bringing the benchmark figure to 4.1%.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair was trading at 0.6990 on Tuesday, up from this week's low of 0.6900.
It formed a doji candlestick pattern, which is made up of a tiny body and upper and lower shadows. A doji is often a reversal sign in technical analysis.
The pair has also formed a bullish flag pattern and remained above the 50-day and 100-day Exponential Moving Averages (EMA).
Therefore, the pair will likely continue rising as bulls target the next key resistance level at 0.7100. A drop below this week's low of 0.6907 will invalidate the bullish outlook.