Bullish View
Buy the AUD/USD and set a take-profit at 0.7390 (23.6% retracement).
Add a stop-loss at 0.7250.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 0.7250 and a take-profit at 0.7150.
Add a stop-loss at 0.7350.
The AUD/USD pair rose in the overnight session as investors reacted to the rising bond yields and the Reserve Bank of Australia (RBA) interest rate decision. The pair rose to 0.7300, which was significantly higher than last week’s low of 0.7170.
Australian Dollar Rallies
The US dollar declined in the overnight session even as the American bond yields continued rallying. The yield on the 10-year rose to 1.52% while the 30-year rose to 2.093%. Similarly, in Australia, the yield on the 10-year rose to 1.54%.
This increase in bond yields is mostly because analysts expect that consumer prices will keep rising in the coming months. Besides, the price of crude oil and natural gas has rallied substantially in the past few days.
Brent, the international benchmark, rose to $83 while the West Texas Intermediate (WTI) rose to more than $80 for the first time in years. Natural gas prices have also surged to more than $6.22, meaning that the trend will continue as the winter season nears.
The AUD/USD also rose as investors reacted to the latest interest rate decision by the Reserve Bank of Australia (RBA). The bank decided to leave interest rates unchanged at 0.10%. It expects to implement the first interest rate hike in 2024. At the same time, the central bank decided to leave its quantitative easing and yield curve control policies intact.
Later today, the main catalyst for the pair will be the estimate of American jobs by ADP. Economists expect the data to show that the country’s private sector added more than 428k jobs in September after adding 374k in the previous month. Still, historically, the data from ADP tends to differ substantially from the official data. The pair will also react mildly to a statement by Raphael Bostic of the Fed.
AUD/USD Forecast
The AUD/USD pair rose to a high of 0.7300. On the four-hour chart, the 25-period and 50-period moving averages have made a bullish crossover pattern. The pair has also risen to the 50% Fibonacci retracement level while the Relative Strength Index (RSI) has risen from 32 to 60. The price is also risen above the pivot point and is approaching the first resistance level.
Therefore, the pair will likely keep rising as bulls target the next key resistance level at 0.7350, which is slightly above the first resistance. On the flip side, a move below 0.7250 will invalidate the bullish view.
