Bullish View
Set a buy-stop at 0.7245 and a take-profit at 0.7300.
Add a stop-loss at 0.7200.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 0.7200 and a take-profit at 0.7150.
Add a stop-loss at 0.7250.
The AUD/USD pair is hovering near its highest level since November 24th as investors reflect on last week’s strong data from the US and the rising number of Covid cases in China and Australia. It is trading at 0.7225, which is slightly below last week’s high of 0.7250.
COVID Cases in Focus
The AUD/USD pair experienced low volumes last week and the trend is expected to continue this week. Besides, most retail and institutional investors are likely taking this week off as they prepare for the new year.
With no major economic data expected, focus will remain on the ongoing trends in Covid-19 cases. Recent data shows that the number of Covid cases is rising in the United States and Australia. In the US, the number of new cases on Christmas day was more than 205k.
The same trend is continuing in Australia. For example, the number of cases in New South Wales jumped to a record high during the weekend. Still, the number of hospitalizations and deaths has been relatively low. This trend confirms last week’s reports that revealed that the Omicron variant was relatively milder than the other variants.
Therefore, these numbers hint that the Reserve Bank of Australia (RBA) and the Federal Reserve will maintain a relatively hawkish sentiment in the coming year. Besides, we don’t expect that the two countries will implement more lockdowns.
The AUD/USD will have little action today. For one, Australia will be in holiday while most American traders will continue the Christmas mood. Still, this little volume environment could lead to significant volatility.
AUD/USD Forecast
The AUD/USD pair has been in a bullish trend in the past few weeks. It has managed to move from a low of 0.7000 in the first week of December to 0.7250. This was a 3.3% increase. On the four-hour chart, the pair has approached the 50% Fibonacci retracement level. It has moved above the 25-day and 50-day moving averages. The current level is important since it was its highest level on December 16th. It is also along the upper chin of the double-bottom pattern.
Therefore, the pair will likely remain in a tight range today because of low volume. Still, the overall trend is bullish, with the next key level to watch being at 0.7300.
