Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7185.
Add a stop-loss at 0.69500.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6950.
Add a stop-loss at 0.7185.
The AUD/USD exchange rate jumped to the highest point since March 20 as the US dollar softened after last Friday’s consumer inflation report. It then retreated to the key support at 0.7000 on Monday morning as geopolitical tensions rose after the failed negotiations between the US and Iran.
Australia Jobs Data Ahead
The AUD/USD pair rose after the US published last month’s consumer inflation report, which showed how prices rose during the war. According to the Bureau of Labor Statistics, the headline Consumer Price Index (CPI) rose from 2.4% in February to 3.3% in March.
US inflation as crude oil and gas prices jumped, which pushed gasoline prices to $4 a gallon. Other prices remained elevated, including transport and fertilizer. In a statement on Saturday, President Donald Trump warned fertilizer companies against price gouging.
The AUD/USD pair then pulled back after the first talks between the US and Iran happened in Pakistan during the weekend. After 21 hours of negotiation, the sides failed to reach an agreement, putting the ceasefire at risk.
In a statement, Trump said that the US would blockade the Strait of Hormuz to ensure that no ships get in or out. He also said that the US millitary would hunt for ships that paid the toll, a move that would hurt key allies and foes like China and India. As a result, crude oil prices soared on Monday, with the two main benchmark rising above $100.
The next important catalyst for the AUD/USD pair will be the upcoming Australian jobs data, which will come out on Thursday this week. Economists expect the report to show that the economy created 20k jobs in March after adding 48.9k in April. The unemployment rate is expected to remain unchanged at 4.3%, while the participation rate remained at 66.9%.
These numbers will help the Reserve Bank of Australia (RBA) when making the next interest rate decision. The bank decided to hike interest rates in the last meeting and left the door open for more hikes this year as inflation remains elevated.
AUD/USD Technical Analysis
The daily timeframe chart shows that the AUD/USD pair jumped in the past few weeks and reached its highest level in weeks. It then pulled back and retested the key support at 0.7000 on Monday morning.
The pair is being supported by the 50-day and 100-day Exponential Moving Averages (EMA), while the Supertrend indicator has turned green. The Relative Strength Index (RSI) has soared and is nearing the overbought level of 70.
Therefore, the pair will likely resume the uptrend as bulls target the next key resistance at 0.7185. However, a drop below the 50-day moving average at 0.6970 will invalidate the bullish outlook.