Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6700.
- Add a stop-loss at 0.6530.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6530.
- Add a stop-loss at 0.6700.
The AUD/USD exchange rate moved sideways on Tuesday as the forex industry remained muted. It was trading at 0.6620, up from last week’s low of 0.6520. It is hovering near its highest point since September 18.
Federal Reserve Officials' Statements
The AUD/USD exchange rate has moved upwards in the past few days as the US dollar has dropped broadly during the government shutdown.
This shutdown, coupled with the recent US jobs numbers, mean that the Federal Reserve will be inclined to cut interest rates in the coming meeting.
The Bureau of Labor Statistics (BLS) did not publish its jobs numbers on Friday because of the shutdown. As a result, investors are relying on a series of private jobs numbers to predict that the labor market deteriorated in September.
One of those reports by ADP revealed that the labor market weakened in October. It showed that the economy shed over 36,000 jobs, the second consecutive month of losses. It lost 3,000 jobs a month earlier.
Looking ahead, some influential Fed officials will talk today, October 7, and provide more details about the economy and what to expect from the bank. Stephen Moran and Michele Bowman have made the case for more cuts, while others, like Raphael Bostic and Neel Kashkari, have warned about inflation.
While analysts expect the Fed to cut rates, the expectation is that the RBA will maintain its policy. It slashed interest rates by 0.25% in the last meeting and hinted that it was not in a hurry to cut.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD exchange rate has rebounded in the past few days. It rose from a low of 0.6520 last week and moved to a high of 0.6617.
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The pair has moved above the 50-day EMA and the major S&R pivot point. Most importantly, it has formed a rising broadening wedge pattern, which is often a highly bullish sign.
The Relative Strength Index (RSI) has moved above the neutral point at 50. Therefore, the AUD/USD pair will likely continue rising, with the next target being the psychological point at 0.6700. A crash below the strong pivot reverse at 0.6530 will invalidate the bullish forecast.
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