Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7150.
Add a stop-loss at 0.6950.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6950.
Add a stop-loss at 0.7150.
The AUD/USD exchange rate held steady on Monday, reaching its highest point since September 23, as investors waited for the upcoming Australian and US macro data and the Federal Reserve interest rate decision. It rose to 0.7033, a few points above this month’s low of 0.6896.
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Australia Inflation Data and Fed Decision
The AUD/USD pair has been in an upward trend in the past few days as investors focus on several important macro data. The Australian Bureau of Statistics (ABS) will publish the third quarter’s consumer inflation data. Economists expect the data to show that the headline CPI rose 3.9% in Q3 after rising by 4.0% in Q2. The CPI is expected to rise 1.3% on a QoQ basis.
The ABS will publish the closely watched weighted and trimmed mean inflation numbers. These metrics will be important because they will help the Reserve Bank of Australia (RBA) when making its interest rate decision. A higher-than-expected metric will push the bank to hike interest rates in the next meeting.
The AUD/USD pair will also release other major metrics. For example, the Conference Board will release the latest consumer confidence report. Data shows that consumer confidence is expected to come in at 80.5, slightly lower than the previous 81.9. Other data to watch will be the upcoming durable goods, house price index, and new home sales numbers.
These numbers will come as the Federal Reserve prepares to deliver its October interest rate decision. Economists expect the bank to leave interest rates unchanged between 3.75% and 4% in this meeting. Officials will provide a guidance on what to expect in the next meeting in December.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has crawled back in the past few days, moving from a low of 0.6896 last week to 0.7033. It formed a small double-bottom pattern, a common bullish reversal sign in technical analysis.
The pair has jumped and is nearing the 23.6% Fibonacci Retracement level of 0.7075. Also, the Relative Strength Index (RSI) has jumped and crossed the neutral level of 50 and is pointing upwards.
The Aussie will likely continue rising as bulls target the important resistance level of 0.7150. A drop below the support level of 0.6950 will invalidate the bullish outlook and point to more downside.
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