Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6900.
Add a stop-loss at 0.7080.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7080.
Add a stop-loss at 0.6900.
The AUD/USD pair retreated for five consecutive days as the US dollar continued its rally. It dropped to the crucial support of 0.700 as traders waited for the upcoming Australian consumer inflation and jobs report, which will determine the next Reserve Bank of Australia (RBA) interest rate decision.
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Australia Inflation and Jobs Reports
The AUD/USD pair is one of the top currencies to watch this week as the Australian Bureau of Statistics (ABS) will publish the latest inflation and jobs report.
Economists expect the upcoming report to show that Australia’s inflation continued rising in May this year. In this case, the CPI is expected to move to 4.30% from the previous 4.20%.
Australia’s inflation has remained above the 2% target in the past few years, pushing the RBA to maintain a highly hawkish tone. It has hiked three interest rates three times this year and Michele Bullock and her team have signaled that the bank may decide to hike this year.
The other key data to watch will be the upcoming Australian jobs data that comes out on Thursday. Economists expect the upcoming report will show that the economy added over 30.3k jobs in May after shedding close to 19k jobs in April.
The unemployment rate is expected to come in at 4.4% from the previous 4.5%, a sign that the labor market is strengthening. A strong jobs report and high inflation figure will raise the possibility of another rate hike.
The AUD/USD pair will also react to the upcoming ADP weekly private jobs report and the services and manufacturing PMI numbers. These numbers will provide information about the state of the US economy, a week after the Federal Reserve delivered its interest rate decision.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has slumped after rising to a high of 0.7276, its highest level on May 13. It has dropped below the 50-day Exponential Moving Average (EMA).
The pair has also dropped below the Major S/R pivot point of the Murrey Math Lines tool at 0.7080. It has continued forming a series of lower lows and lower highs. Also, the Relative Strength Index (RSI) have continued falling.
Therefore, the pair will likely continue falling, potentially to the ultimate support of 0.6835. A move above the key resistance at 0.7090 will invalidate the bearish outlook.
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