Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6350.
- Add a stop-loss at 0.6550.
- Timeline: 1-2 day.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6550.
- Add a stop-loss at 0.6350.
The AUD/USD exchange rate pulled back below the crucial support level at 0.6450 as the US dollar index rebounded ahead of the upcoming Federal Reserve minutes and Jerome Powell's speech at the Jackson Hole Symposium.
Focus on the Federal Reserve
The AUD/USD exchange rate retreated as the US Dollar Index rebounded to $98.25, its highest level in over a week, as investors waited for the upcoming news from the Federal Reserve.
The bank will publish minutes of the last meeting during the American session. These minutes have historically lead to major swings in the market as they provide more information about the last meeting and hints on what to expect
The minutes come after the US published mixed economic data. A report released by the Bureau of Labor Statistics showed that the economy created 73k jobs in July, while the unemployment rate rose to 4.2%.
More data showed that Donald Trump's tariffs were having an impact on the American economy, especially on inflation. The headline Consumer Price Index (CPI) data remained unchanged at 2.7%, while the core inflation rose to 3.1%.
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Another report showed that the producer price index jumped to 3.6% in July, while the core figure, which excludes the volatile food and energy prices, rose by 3.7%.
Therefore, the Fed minutes are unlikely to have a significant impact on the AUD/USD pair, as they come ahead of Jerome Powell's upcoming speech at the Jackson Hole Symposium. The speech will provide more hints on what to expect in the coming meeting in September.
There will be no macro data from Australia and the US for the remainder of the week, making the Jackson Hole Symposium the main catalyst for the pair.
AUD/USD Technical Analysis
The AUD/USD exchange rate has pulled back in the past few days. It has dropped from a high of 0.6627, its highest level on July 24.
The pair has moved below the 50-day Exponential Moving Average (EMA). It has also dropped below the lower side of the ascending channel, while the Relative Strength Index (RSI) has moved below the neutral point.
The pair will likely have a bearish breakout, especially when it moves below the support at 0.6422, its lowest level on July 31st. A drop below that level will point to more downside, potentially to 0.6350.
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