Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7100.
Add a stop-loss at 0.6985.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6985.
Add a stop-loss at 0.7100.
The AUD/USD pair has traded sideways over the past few days as investors digest several key events, including last week’s Federal Reserve decision and Australia’s consumer inflation data. It was trading at 0.7030, a few points below last month’s high of 0.7066, with focus now turning to the Reserve Bank of Australia (RBA) decision and US jobs data.
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RBA Set to Hike Interest Rates
The AUD/USD pair traded sideways as investors reacted to notable US and Australian developments. In the United States, the Federal Reserve delivered interest rates unchanged between 3.75% and 4%. Officials hinted that they will deliver another rate hike in December as inflation remains above the 2% target.
The pair also reacted to the quarterly inflation report from Australia. According to the Australian Bureau of Statistics (ABS), the headline consumer inflation rose 3.9% in the third quarter. The trimmed and weighted mean CPI rose 3.6% and 3.4%, respectively. These numbers mean that inflation has remained above the 3% target.
As a result, economists expect the Reserve Bank of Australia (RBA) will deliver its fifth interest rate hike on Tuesday. If this happens, it will move rates to 4.85%, the highest level in years, and expanding the spread between the US and Australian interest rates.
The AUD/USD pair will react to the upcoming US macro data, including the private payrolls and the official nonfarm payrolls (NFP) data. ADP will release the official jobs numbers on Wednesday, with economists expecting the figure to come in at 68k. The official jobs numbers will come out on Friday.
These numbers are crucial because they will help the Federal Reserve when delivering its interest rate decision in December. A strong NFP figure will lead to higher odds that the Fed will hike interest rates in December.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has crawled back in the past few weeks, moving from a low of 0.6895 to the current 0.7030. It has stalled at the 50-day Exponential Moving Average (EMA).
It has also moved to the Point of Control of the fixed range volume profile. Also, it has remained above the Supertrend indicator. Therefore, the pair will likely continue rising as bulls target the key resistance level of 0.7100. This view will be confirmed if it moves above the key resistance level of 0.7055.
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