Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6550.
- Add a stop-loss at 0.6365.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6365.
- Add a stop-loss at 0.6550.
The AUD/USD exchange rate rebounded as the US Dollar Index (DXY) rose after the latest US consumer inflation data. It rose to a high of 0.6475, up by 1.85% from the lowest level this week.
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US inflation points to a Fed cut
The AUD/USD pair rose after a report by the Bureau of Labor Statistics (BLS) released another encouraging inflation data. The headline CPI dropped to 2.3% in April, the same month that Donald Trump unveiled tariffs on all countries. It was lower than the median estimate of 2.4%.
Core inflation remained unchanged at 2.8%. Analysts warned that these numbers could mark a bottom as inflation is expected to rise in the coming months. That’s because the data was collected shortly after Trump unveiled his tariffs, and many companies had inventories acquired before the tariffs came in place.
A good example of this is the fact that the US trade surplus surged to a record high in March as companies rushed to buy products from Asian countries like China and Vietnam.
Fortunately, there are signs that the expected inflation growth will not be as high as expected now that the US has started inking deals with other countries. It agreed to lower tariffs on Chinese goods from 145% to 30%. And last week, the US also slashed tariffs on some goods from the UK.
However, the US will likely maintain higher tariffs than in the past as Trump’s officials have hinted that the benchmark 10% tariff will remain.
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The next important AUD/USD news will come out on Thursday when Australia will publish the April jobs numbers. Economists expect the report to show that the unemployment rate remained at 4.1%, while the economy created 20k jobs,
The US will also publish the latest retail sales, the Philadelphia Fed manufacturing index, and the PPI inflation report.
AUD/USD technical analysis
The AUD/USD exchange rate bounced back and reached to a high of 0.6478 after the US published its inflation data. It has formed an ascending channel, while the 50-day and 100-day Exponential Moving Averages are about to form a bullish crossover pattern.
The pair has also moved above the 50% Fibonacci Retracement level. It has also formed an inverse head and shoulders pattern, a common reversal sign. Therefore, the pair will likely keep rising as bulls target the 61.8% retracement point at 0.6550.
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