Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6415.
- Add a stop-loss at 0.6250.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6250.
- Add a stop-loss at 0.6415.
The AUD/USD exchange rate has remained in a tight range in the past few weeks, even as other currencies have surged against the US dollar. The pair was trading at 0.6327 on Monday, where it has been stuck at in the past few weeks. This price is about 3.9% above its lowest level this year.
FOMC and Australian jobs data
The AUD/USD pair has wavered as the US dollar index has crashed amid the ongoing trade war between the US and its top trading partners.
The US has implemented a 20% tariff on imported goods from China, Australia’s biggest trading partner. It also implemented some tariffs that will impact Australia directly like steel.
While other countries have retaliated, Anthony Albanese has hinted that he will not do that since it will hurt Australians.
On the positive side, in Trump’s view, the US has a big trading surplus with Australia. Data shows that the surplus amounted to over $17.9 billion. This surplus increases when one adds the services the US sells to Australia.
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The main catalyst for the AUD/USD pair this week will be the upcoming Federal Reserve interest rates on Wednesday. Economists see no need for the bank to cut or hike interest rates in this meeting.
Instead, the bank will likely leave interest rates unchanged at 4.50% anf point to at least three cuts this year. The bank will likely prioritize the country’s economic growth instead of inflation that is expected to keep rising this year.
The other key AUD/USD news to watch this week will be the Australian jobs numbers on Thursday. Economists expect the data to show that the participation rate rose slightly to 67.4%, while the economy added over 15k jobs.
AUD/USD technical analysis
The AUD/USD exchange rate has moved sideways in the past few days, and was trading at 0.6325 on Monday. This price is slightly above the 23.6% Fibonacci Retracement level at 0.6287.
It has also moved above the 50-day Exponential Moving Average (EMA). The Relative Strength Index (RSI) has pointed upward and moved above the neutral point at 50.
The pair has made a symmetrical triangle pattern, with the two lines nearing their confluence level. Therefore, the pair will likely remain in a tight range this week and possibly rebound to the 38.2% and 50% retracement points at 0.6412 and 0.6515, respectively.
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