Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6280.
- Add a stop-loss at 0.6450.
- Timeline: 1-2 days.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6450.
- Add a stop-loss at 0.6280.
The AUD/USD exchange rate retreated slightly after rising to a crucial resistance level earlier this week. It dropped to a low of 0.6360 on Thursday, down by 1.2% from its highest level this week.
Australian dollar surge fades
The AUD/USD pair retreated as the recent economic risks faded. Donald Trump quashed the rumors that he wanted to fire Jerome Powell from the Fed.
Media reports had quoted Kevin Hassett, the head of the economic council, who noted that he was studying whether he could remove Powell. Trump has been complaining about Powell since he got in office.
He has been calling for him to slash interest rates, citing official numbers revealing that inflation was moving downwards. Trump has insisted that the Fed will be to blame for any economic slowdown that happens this year.
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Most analysts blame his tariffs for the anticipated slowdown. In a report on Tuesday, the International Monetary Fund (IMF) cited these tariffs when it downgraded the US economic forecast for the year.
The AUD/USD pair also retreated after Trump hinted that he wants to do a trade deal with China. According to The Wall Street Journal, the president aims to reduce China tariffs from the current 145% to approximately 50%. Such a move will likely lead to more optimism about the economy.
Trade news is likely to influence the AUD/USD pair today, as there are no major economic releases scheduled. The key data to watch will be the existing home sales, durable goods, and initial jobless claims. These numbers are unlikely to have a significant impact on the pair.
AUD/USD technical analysis
The daily chart shows that the AUD/USD exchange rate has pulled back in the past few days. It retreated to a low of 0.6360, down by 1.25% from its highest level this week. This drop happened after it found substantial resistance at a level it has failed to move above before.
The pair moved slightly below the 50% Fibonacci Retracement point, while most oscillators pointed downwards. Therefore, the most likely scenario is where the pair will drop and retest the 50-day and 100-day Weighted Moving Averages point at 0.6357, and then move upwards.
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