Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6800.
Add a stop-loss at 0.7000.
Timeline: 1-2 days.
Bullish view
Buy the BTC/USD pair and set a take-profit at 0.7000.
Add a stop-loss at 0.6800.
The AUD/USD pair has been in a downward spiral in the past few weeks as the US dollar has rallied amid carry trade hopes. It was trading at 0.6895, down sharply from a high of 0.7275. This retreat may continue ahead of the US non-farm payrolls (NFP) data.
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Australian Dollar is Falling as US Dollar Rebounded
The AUD/USD pair has dropped sharply in the past few weeks as the US dollar has soared. The dollar index soared from a low of $95.53 earlier this year to a high of $101.80. This rally escalated after the last Federal Reserve meeting, in which officials signaled that they will hike interest rates later this year to contend with the elevated inflation.
On the other hand, there are signs that the Reserve Bank of Australia (RBA) will not hike interest rates this year. A report released last week showed that the headline Consumer Price Index (CPI) showed that the headline consumer inflation slowed to 4% in May from 4.2% in April.
Another report showed that the economy created 40.3k jobs in May after losing 40.7k in April. The jobs report was higher than the median estimate of 31.2k. Also, the unemployment rate improved to 4.4%.
The next key catalyst for the AUD/USD pair will be the upcoming US consumer confidence and jobs data. Economists expect the upcoming report to show that the consumer confidence rose to 94.2 in June from 93.1. Confidence has been rising as energy prices have softened and as the labor market has improved.
The pair will next react to the upcoming US nonfarm payrolls (NFP) report on Friday. Economists expect the data to show that the economy added over 100k jobs in June, with the jobless rate remaining at 4.2%.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has been in a strong downward trend in the past few months, falling from the year-to-date high of 0.7276 to the current level of 0.6895. It has slipped below the 50-day moving average and the Supertrend indicator.
The pair has also formed a double-top-like pattern with a neckline at 0.6830. It’s RSI has also formed a descending channel and has moved below the oversold level.
Therefore, the pair will likely continue falling, potentially to the key support level of 0.6800. A move above the key resistance at 0.6970 will invalidate the bearish outlook.
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