Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6450.
- Add a stop-loss at 0.6600.
- Timeline: 1-2 days.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6450.
The AUD/USD exchange rate popped to its highest level since November 17 after the Australian Bureau of Statistics (ABS) published strong inflation numbers. It rose to 0.6512, much higher than this month’s low of 0.6420.
RBA Interest Rate Cut Odds Fall
The AUD/USD pair continued its recent recovery after an ABS report showed that inflation remained strong last month. The headline inflation was flat from the previous month, but rose from 3.6% in September to 3.8% in October. This increase was higher than the median estimate of 3.6%.
Meanwhile, the trimmed mean inflation, which excludes the volatile food and energy prices, rose slightly from 3.2% to 3.3%. The weighted mean inflation rose from 3.3% to 3.4%. These numbers were significantly higher than the bank’s target of 2.0%.
Therefore, economists believe that the RBA will maintain its cautious tone in the final meeting of the year. It maintained rate steady at 3.6% in the last meeting after delivering three cuts earlier this year.
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The AUD/USD pair also rose after some key US economic data released on Wednesday. A report showed that durable goods orders dropped to 0.5% in September from the previous 3.0%. On the positive side, initial jobless claims improved to 216,000 from the previous 223k.
Looking ahead, the pair will not have any catalyst on Thursday as US markets will be closed for the Thanksgiving holiday. There will also be no macro data from the United States and Australia.
AUD/USD Technical Analysis
The daily timeframe chart shows that the AUD/USD pair rebounded to a high of 0.6515, up sharply from this month’s low of 0.6420. Its lowest level this month was notable as it was its lowest point in July and August. It was also the lower side of the head-and-shoulders pattern, a popular bearish reversal sign.
The pair remains below the Supertrend indicator, which is a bearish sign in technical analysis. Therefore, the pair will likely resume the downward trend and possibly retest the support at 0.6420.
On the other hand, a move above the psychological point at 0.6600 will invalidate the bearish outlook.
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