Top Regulated Brokers
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7150.
Add a stop-loss at 0.6975.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6975.
Add a stop-loss at 0.7150.
The AUD/USD exchange rate rose to 0.7045 on Monday as traders positioned themselves for the upcoming Federal Reserve interest rate decision and key US macro data. It rose to 0.7045, a few pips above this month’s low of 0.6978.
Federal Reserve Interest Rate Decision
The AUD/USD pair rose slightly ahead of the Federal Reserve interest rate decision on Wednesday. This decision comes a few days after the US published strong consumer and producer inflation data.
The report showed that the headline CPI and PPI data rose to 4.2% and 6.4% in May, moving further away from the Federal Reserve’s target of 2.0%. Inflation has been moving upwards since the US and Israel started the war against Iran in February.
These inflation numbers came a few days after the US published strong non-farm payrolls (NFP) data. The report showed that the US economy added over 172k jobs in May, higher than the expected 85k.
It is against this backdrop that the Federal Reserve is meeting this week. With US inflation rising and the labor market strengthening, traders anticipate the bank, under Kevin Warsh, to maintain interest rates unchanged between 3.50% and 3.75%.
On the positive side, there are signs that inflation is starting to ease. For example, the average gasoline price has dropped to $4.03 a barrel, down from $4.5 last month. This retreat will likely continue as hopes of a deal between Iran and the US continue.
The other key catalysts for the AUD/USD pair will be key macro data from the United States. Some of these numbers are retail sales, housing starts and building permits, and the Philadelphia Fed Manufacturing index. The Australian dollar will react moderately to the upcoming Chinese retail sales and industrial production data.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has stabilized in the past few days. It has rebounded to 0.7045 from this week’s low of 0.6980. Its lowest point coincided with the lower side of the ascending channel shown in black.
The pair has moved slightly above the 50-day Exponential Moving Average (EMA). At the same time, it has moved above the Strong, Pivot, and Reverse level of the Murrey Math Lines tool.
The Relative Strength Index (RSI) and the MACD have also moved upwards. Therefore, the AUD/USD pair will likely continue rising as bulls target the key resistance level at 0.7150. A drop below the support at 0.6980 will invalidate the bullish outlook.
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