Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7150.
Add a stop-loss at 0.6923.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6923.
Add a stop-loss at 0.7150.
The AUD/USD pair continued the uptrend as the US dollar softened. It jumped to 0.7062, its highest level since June 17. It has been in a slow uptrend since June 30 when it bottomed at 0.6866.
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US NFP Data and RBA Decision
The AUD/USD pair has been in a strong uptrend as odds that the Strait of Hormuz will be opened rose. These odds have jumped as talks between Iran and Oman have continued this week, leading to lower crude oil prices.
The next few days will be crucial for the pair. For one, the US will release the latest initial and continuing jobless claims numbers later today. Economists expect these numbers to show that claims increased by 203k last week after slowing by 197k in the previous one. Challenger will publish the latest job cuts for last month.
The next big catalyst for the pair will be the upcoming nonfarm payrolls (NFP) data on Friday. Economists expect the report to reveal that the economy created 80k jobs in July after adding 57k in the previous month. In the past, however, the real report has come out short of expectations.
A report released on Wednesday showed that the private sector added just 44k jobs in July, much lower than what analysts were expecting.
Meanwhile, the Australian dollar will react to the upcoming Reserve Bank of Australia (RBA) interest rate decision on Thursday. Economists have a mixed opinion on the RBA’s decision. Some believe that the bank will decide to hike interest rates to 4.60%. If this happens, it will be the fourth consecutive month in which officials have hiked the rate.
Other analysts predict that the bank will leave interest rates unchanged, while maintaining the flexibility to hike later this year.
AUD/USD Technical Analysis
The daily chart reveals that the AUD/USD pair has been in a strong uptrend in the past few weeks. It has jumped to 0.7061, its highest level since June 17.
As a result, it has recently moved above the 50-day moving average and the key resistance level of 0.7026, its highest level on July 21.
It has retested the upper side of the ascending channel, which is part of the bearish flag pattern that has been forming in the past few months. The Relative Strength Index (RSI) has jumped and has just crossed the neutral level of 50.
Therefore, there is a likelihood that the pair will continue rising a bit until it gets overbought. It will then retreat, possibly ahead or after the RBA decision next week.
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