Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7250.
Add a stop-loss at 0.7000.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.7000.
Add a stop-loss at 0.7250.
The Australian dollar continued rising and was nearing the year-to-date high of 0.7185 as the US dollar retreated. The AUD/USD pair rose to 0.7130 on Wednesday, up from the year-to-date low of 0.6833 as focus shifts to the upcoming Australian jobs report.
Falling US Dollar and Australian Jobs Data
The AUD/USD exchange rate continued its strong uptrend this week as the US dollar retreated across the board. Data shows that the US Dollar Index (DXY) dropped to $98, its lowest level since March 2nd and much lower than the year-to-date high of $100.57.
The pair continued rising as crude oil prices plunged, with crude oil prices falling to $95 amid reports that talks between the US and Iran were still continuing. Reports suggest that the two sides will have a face-to-face meeting before the two-week ceasefire happens.
The ongoing risk-on sentiment has pushed to higher stock and crypto prices. In the US, the Dow Jones and the Nasdaq 100 Index rose by triple digits, while crypto prices continued rising.
The AUD/USD pair will next react to the upcoming Australian jobs data, which will come out on Thursday. Economists expect the data to show that the Australian economy created 20k jobs in March after adding 48.9k in the previous month. The participation rate is expected to drop to 66.8% from the previous 66.9%.
Australia’s jobs numbers will help the country’s central bank when delivering its interest rate decision later this month. It has hiked interest rates in the last two consecutive meetings, and analysts expect another hike this year as inflation has remained at an elevated level.
The AUD/USD pair will also react to the upcoming Chinese macro data, including the March house price index, retail sales, and first quarter GDP. The Chinese macro numbers are important because the country is Australia’s biggest trading partner.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has been in a strong uptrend in the past few weeks. This rebound started when it bottomed at 0.6833 on March 30.
It has already crossed the 50-day moving average and is nearing the year-to-date high of 0.7185, where it failed to move above at least three times this year.
The Relative Strength Index has risen and is nearing the overbought level of 70. Also, the Stochastic Oscillator has crossed the overbought level of 80.
Therefore, the path of the least resistance is where it continues rising as bulls target the next key psychological level at 0.7200. This view will be confirmed when it jumps above the resistance at 0.7185.