Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.7200.
- Add a stop-loss at 0.6935.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6935.
- Add a stop-loss at 0.7200.
The AUD/USD exchange rate soared to the highest level since February 2023 as the US Dollar Index retreat gained steam. It has risen for four consecutive weeks and is up by nearly 20% from its lowest in April last year.
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The pair rallied even after the US released the latest retail sales, export and import prices, and jobs reports. Data released by ADP showed that the economy created 6.5k jobs last week after adding 5k in the previous month.
Another report showed that the country’s retail sales rose by 2.4% in December after growing by 3.3%. Also, the US released encouraging import and export prices numbers.
Meanwhile, Lorie Logan and Beth Hammack, of the Dallas and Cleveland Fed, insisted that the Federal Reserve will maintain interest rates unchanged for a while. They hope to see inflation falling further towards the Federal Reserve's target of 2.0%.
The next important AUD/USD news will be the upcoming US non-farm payrolls (NFP) data on Wednesday and US Consumer Price Index (CPI).
Economists polled by Reuters expect the upcoming report to show that the economy added 70,000 jobs in January after adding 50k in the previous month. The participation rate is expected to come in at 62.4%, while the unemployment rate remained unchanged at 4.4%.
Michele Bowman, the Vice Chair of Supervision, will talk today and share her opinion on the economy and what to expect.
The US will release the upcoming initial and continuing jobless claims data and the latest existing home sales data, which will provide more information about the state of the US economy. The US will release the latest Consumer Price Index data on Friday, which will shed more light on inflation.
AUD/USD Technical Analysis
The weekly timeframe chart shows that the AUD/USD exchange rate has remained steady in the past few months, moving from a low of 0.59188, its lowest level in April last year.
It has moved above the key resistance level at 0.6932, its highest swing in September 2024. The 50-week and 100-week Exponential Moving Averages (EMA) have formed a bullish crossover.
The Relative Strength Index (RSI) has moved to the overbought level of 75, while the Percentage Price Oscillator (PPO) moved above the zero line.
Therefore, the pair will likely continue rising as bulls target the psychological level at 0.7200. A drop below the key support level at 0.6932 will invalidate the bullish outlook.
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