Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6870.
- Add a stop-loss at 0.6700.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6785 and a take-profit at 0.6700.
- Add a stop-loss at 0.6870.
The AUD/USD exchange rate wavered near its highest point this year after the relatively dovish Federal Reserve interest rate decision. It rose to a high of 0.6837 as traders focus on the upcoming Reserve Bank of Australia (RBA) decision and US consumer confidence data.
RBA interest rate decision ahead
The AUD/USD pair rose after the Fed delivered its first interest rate cut in over four years in its bid to engineer a soft landing for the economy.
It slashed rates by 0.50% and hinted that more cuts were coming if the labor market continued getting worse. Analysts now expect the bank will deliver more cuts in the last meetings of the year.
Therefore, the upcoming economic numbers will have a mild impact on the US dollar. The key data to watch will be the consumer confidence report, which will come out on Tuesday. Economists expect the data to show that confidence rose slightly from 103.3 in August to 103.50 in September.
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The other data will be the flash manufacturing and services PMI numbers, which will provide more color on the state of the economy.
Meanwhile, the Reserve Bank of Australia will deliver its interest rate decision on Tuesday. Unlike the Fed, the base case is that it will maintain status quo and leave interest rate unchanged at 4.35%.
In the last meetings, the RBA has hinted that it was open to hiking rates if inflation remains strong. However, most analysts expect that the bank will likely leave rates steady for a while and then start slashing them in the first quarter of 2025. This means that it will be the last major central bank to cut rates.
AUD/USD technical analysis
The AUD/USD pair was trading at an important resistance level at 0.6800, a few pips above 0.6797, its highest swing on June 11. It has formed a triple-top chart pattern, which is often seen as a reversal sign.
The pair remains slightly above the 50-day and 25-day Exponential Moving Averages (EMA), meaning that bulls are in control for now. Also, the Relative Strength Index (RSI) and the Percentage Price Oscillator have drifted upwards.
Therefore, more gains will only be confirmed if the pair rises above last week’s high of 0.6840. That move will see it jump to the next resistance point at 0.6870, its highest level in December last year.
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