Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7265.
Add a stop-loss at 0.7050.
Timeline: 1-2 days.
Bearish view
Buy the AUD/USD pair and set a take-profit at 0.7050.
Add a stop-loss at 0.7265.
The AUD/USD pair continued its strong rally, reaching its highest level since June 3rd this year. It jumped to a high of 0.7170, up sharply from the June low of 0.6870. This rally coincided with the broader US dollar sell-off that happened as the public debt soared to a record high of $40 trillion.
Top Regulated Brokers
US Dollar Sell-Off Intensifies
The AUD/USD pair jumped as the US dollar dropped to its lowest level in months. The DXY Index fell to 98.56, its lowest level on May 11 this year, and 3.18% below the year-to-date high of 101.80.
This performance came as concerns about the US economy continued to rise this year. The US debt has jumped to a record high of over $40 trillion, which has pushed yields to the highest level in nearly two decades. Worse, the Fed’s attempts to salvage the situation and bring yields lower have largely backfired.
US bond yields have jumped as concerns about the stability of the economy have continued. Inflation remains stubbornly high, while consumer confidence has plunged. A Conference Board report coming out on Tuesday is expected to show that confidence retreated sharply this month.
Australia’s bond yields have also continued rising this year, with the 30-year rising to 5.60%, its highest level in over a decade. It has been in an uptrend after bottoming at 1.1% during the pandemic.
The AUD/USD pair rose even after a report showed that the Australian economy was softening. A report showed that the economy lost over 15,000 jobs last month, with the participation rate falling a bit. These numbers mean that the RBA will maintain interest rates unchanged this year since inflation has also softened.
The key macro data to watch this week will be the US Personal Consumption Expenditures (PCE) report that comes out on Thursday. Most importantly, Fed Chair Kevin Warsh will be in the spotlight at the Jackson Hole Symposium.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has been in a strong upward trajectory after bottoming at 0.6865 on June 30th. It has now moved to 0.7170, its highest level since June 3rd.
The pair has continued to gain momentum, with the Relative Strength Index (RSI) rising to 69. Also, the Average Directional Index (ADX) has continued rising this month.
Therefore, the pair will likely continue to rise in the coming days, with the next key target being at 0.7266, its highest level on May 13.
Ready to trade our free trading signals? We’ve made a list of the top forex brokers in Australia for you to check out.