Bearish view
Sell the AUD/USD pair and set a take-profit at 0.7000.
Add a stop-loss at 0.7200.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7200.
Add a stop-loss at 0.7000.
AUD/USD pair remains under pressure, helped by the relatively hawkish Federal Reserve interest rate decision and the rising geopolitical tensions. It was trading at 0.7118 on Tuesday morning, down by 1.68% from its highest point this month.
Australia Jobs Data and RBA Interest Rate Decision
The Australian dollar has slipped in the past few weeks, helped by the relatively strong US dollar. The dollar index jumped to 100.43, its highest level since July 30 and much higher than this month’s low of 98.58.
Its rally accelerated after last week’s Federal Reserve interest rate decision, in which officials decided to hike rates by 0.25%. Officials hinted that they will hike rates in the upcoming months to curtail the elevated inflation.
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Fed officials believe that the bank needs to hike rates in the coming months as inflation has remained above the 2% target in the last five years.
Focus now shifts to Australia, where the country’s bond yields have continued rising in the past few years. The ten-year yield recently jumped to a multi-year high of 5.44% and then pulled back to 5.26%. It remains much higher than the year-to-date low of 4.63%.
Australia’s statistics agency will publish the latest jobs numbers on Thursday. Economists expect the upcoming report to show that the economy added more jobs last month.
After that, the next key catalyst for the pair will be the upcoming Reserve Bank of Australia (RBA) interest rate decision next week. Economists now expect that the bank will hike rates by 0.25% in this meeting. If this happens, it will be the fourth one this year, making the bank the most hawkish central bank in the developed world.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has slumped in the past few weeks, moving from a high of 0.7238 to a low of 0.7074 last week. It has now rebounded modestly to the current 0.7120.
Its lowest level last week coincided with the Major S/R pivot point of the Murrey Math Lines tool. It has slipped below the 50-day moving average and the lower side of the rising wedge pattern.
Therefore, the pair will likely resume the downward trend, potentially to the support level of 0.7000. A move above the resistance at 0.7200 will invalidate the bearish outlook.
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