Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6800.
Add a stop-loss at 0.7050.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7050.
Add a stop-loss at 0.6800.
The AUD/USD pair continued its downtrend on Thursday as Iran and the United States took different positions on how to end the ongoing war. It dropped to 0.6940, down from this year's high of 0.7180.
Iran Rejects Trump's Outreach
The AUD/USD pair continued falling this week as the Iranian government rejected Donald Trump's outreach on talks. Trump and his administration sent a 15-point plan on ending the war, which includes the country dismantling its nuclear plants.
Iran, on the other hand, has rejected that plan and shared a list of five demands, including reparations and the closing of US bases in the Middle East.
Therefore, the most likely scenario is that the ongoing war continues for longer now that the US is gathering troops in the region. Some analysts expect that the troops will aim to occupy the crucial Kharg Island and or take positions to defend the Strait of Hormuz.
These fears explain why crude oil prices have started rising again. Brent, the global benchmark, jumped to $99, while the West Texas Intermediate (WTI) jumped to $92.
The AUD/USD pair will next react to the upcoming US initial and continuing jobless claims data. Also, several Fed officials will deliver their statements in the next two sessions.
Lisa Cook will talk later today, while Stephen Miran and Philip Jefferson will talk on Friday. In a statement on Wednesday, Stephen Miran said that he still supported cutting interest rates despite the ongoing inflation jitters.
The Reserve Bank of Australia (RBA), on the other hand, has hinted that it will hike interest rates again as inflation remains elevated. A report released this week showed that the headline and weighted mean inflation remained above 3% in February.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair retreated for three consecutive days and is now hovering near its lowest level since February. It has dropped to 0.6945 from the year-to-date high of 0.7180.
The pair has moved below the ascending trendline that connects the lowest swings since January this year. It has dropped below the 50-day Exponential Moving Average (EMA).
Also, the two lines of the Percentage Price Oscillator (PPO) have continued falling and are about to move below the zero line. The Relative Strength Index (RSI) has continued falling and is slowly nearing the oversold level.
Therefore, the pair will likely continue falling, potentially to the next key target to watch being at 0.6800.