Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6900.
- Add a stop-loss at 0.7100.
- Timeline: 1-2 days.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.7100.
- Add a stop-loss at 0.6900.
The AUD/USD exchange rate rose slightly on Monday as traders embraced a risk-on sentiment after the US paused its attacks against Iran. It also wavered ahead of the Federal Reserve decision and Australian consumer inflation data. It was trading at 0.6983, a few pips below the month-to-date high of 0.7027.
Fed Decision and Australia Inflation Report
The AUD/USD pair rose slightly after Australia released strong jobs numbers. A report by the statistics agency showed that the economy added 76,300 jobs in June after adding 43,900 jobs in May. The unemployment rate remained unchanged at 4.4%.
These numbers mean that the Reserve Bank of Australia (RBA) may decide to hike interest rates later this year. This view will be confirmed after the upcoming consumer inflation data later this week. Economists expect the report to show that inflation softened a bit last month as energy prices fell. The most recent data showed that the country’s inflation rose to 4.1% in the first quarter as prices jumped.
The RBA has been more open to hiking interest rates than other central banks. It hiked rates three times this year, making the most hawkish central banks in the market.
The AUD/USD pair will also react to the upcoming Federal Reserve interest rate decision. Economists expect the bank to leave interest rates unchanged between 3.50% and 3.75% in this meeting.
However, with inflation remaining above the 2% target for years, and with energy prices, analysts believe that the bank may decide to hike rates later this year. Odds of a hike happening later this year have jumped to 75% on Polymarket.
Beyond the rate hikes, the AUD/USD pair will react to several important macro data, including the US consumer confidence, GDP, and personal consumption expenditure report.
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AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has remained under pressure in the past few days. It pulled back from a high of 0.7027 in July to the current 0.6983.
The pair has moved to the lower side of the ascending channel. This channel is part of the formation of the bearish flag pattern. This pattern normally leads to a bearish breakout over time.
The pair remains below the 100-day moving average. Therefore, the most likely AUD/USD forecast is bearish, with the next key target to watch being the psychological point at 0.6900. A move above the resistance level of 0.7027 will point to more gains.
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