Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6850.
Add a stop-loss at 0.7050.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7050.
Add a stop-loss at 0.6850.
The AUD/USD exchange rate rose for the second consecutive day, reaching its highest point since June 23rd as the US dollar softened after last week’s nonfarm payrolls (NFP) report. It rose to a high of 0.6940, 1.20% higher than this month’s low of 0.6867.
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US PMIs and FOMC Ahead
The AUD/USD pair rose after the US published a weak jobs report, which showed that the economy created less jobs than expected in June. It created just 57k jobs, badly missing what analysts were expecting. The economy also created 129k jobs in May, much lower than the 172k that the Labor Department reported last month.
More data by the ISM and S&P Global showed that manufacturing activity softened last month. While the PMI was above the expansion zone of 50, it was the third consecutive month that the figure dropped.
The next key data to watch will be the upcoming US services and composite PMI report. The services PMI is expected to come in at 51.3, while the composite figure is expected to remain at 52.2. Another report by the Institute of Supply Management (ISM) is expected to come in at 54.2.
The Federal Reserve will also publish minutes of the last meeting. These minutes will provide more information about the last meeting and what officials deliberated. In that meeting, officials left interest rates unchanged between 3.50% and 3.75%. Notably, officials signaled that they were open to hike interest rates later this year.
The Fed, however, may not hike interest rates this year now that the economy is slowing. Odds of a hike on Polymarket dropped to 47% from last year’s high of 55%.
There will be no major macro data from Australia this week. The only report to watch will be last month’s building approvals data.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has been in a strong sell-off in the past few weeks. It has dropped from the year-to-date high of 0.7280, and formed a descending channel. It has remained below 38.2% Fibonacci Retracement level. This retracement is drawn by connecting the lowest point in November last year and the YTD high of 0.7281.
The pair has formed a descending channel and has recently retested its upper side. Therefore, the pair will likely resume the downtrend and possibly retest the year-to-date low of 0.6865.
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