Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6895.
Add a stop-loss at 0.6957.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.6957.
Add a stop-loss at 0.6895.
Top Regulated Brokers
The AUD/USD pair pulled back to 0.6920 on Tuesday after touching this week’s high of 0.6930. The pullback came as crude oil prices dropped, even though China published encouraging import and export figures. Attention now turns to the upcoming US Consumer Price Index (CPI) report and statements from key Fed officials.
US Consumer Inflation Report Ahead
The AUD/USD pair pulled back even after China published strong trade numbers. A report from the National Bureau of Statistics (NBS) showed that exports rose 35.2% in October, above the expected 33.5%. Imports climbed 41.6%, also ahead of the 32% forecast. The trade surplus stood at over $105 billion, lifting the year-to-date total to $712 billion.
These numbers are important for the Australian economy because of the strong ties between the two countries. Australia exports goods and services worth over $196 billion to China a month, with most of them being iron ore and mineral fuels.
The AUD/USD pair will next react to the upcoming US Consumer Price Index (CPI) report, which should offer more clues about inflation trends. Economists expect the report to show that price pressures eased slightly last month, with headline and core CPI slowing to 0.3% and 0.2%, respectively. The report will not include an annual figure because last year’s government shutdown disrupted data collection for the same period.
The US inflation report comes at a time when crude oil prices are falling, with Brent and the West Texas Intermediate (WTI) dropping to $91 and $85, respectively. Gasoline and diesel prices have also continued falling in the past few days.
The AUD/USD pair will also react to statements from several Federal Reserve officials, such as Lorie Logan and Michele Bowman.
AUD/USD Technical Analysis
The four-hour chart shows that the AUD/USD pair has been in a slow upward trend in the past few weeks, moving from a low of 0.6853 last week to the current 0.6920. It has risen above the important resistance level of 0.6895, its lowest swing on October 15 this year.
Still, the pair has remained below the 50-period Exponential Moving Average (EMA) and the Supertrend indicator. Also, the pair has formed an inverted cup-and-handle pattern. Therefore, the pair will likely resume the downward trend, potentially to the support level of 0.6895. A move below that level will point to more downside, potentially to this month’s low of 0.6853.
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