Bullish View
- Buy the AUD/USD pair and set a take-profit at 0.6650.
- Add a stop-loss at 0.6450.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6450.
- Add a stop-loss at 0.6650.
The AUD/USD pair gapped upwards and jumped to its highest level since October 10 as the recent trade tensions eased and as traders waited for key events from the US and Australia. It rose to a high of 0.6550, up from this month's low of 0.6440.
Australia Dollar Waits for Key Events
The AUD/USD exchange rate has been in a strong uptrend in the past few days as traders cheered the progress made between the US and China. The two adversaries made some agreements that will likely see the US lower the existing tariffs on goods from China.
Donald Trump has also sounded more enthusiastic about his upcoming meeting with Xi Jinping at the APEC Summit in South Korea, where they will deliberate on trade and other issues.
A potential mutually-beneficial trade deal with China would be bullish for the Australian dollar because of the vast amount of goods that China buys from Australia. It would also reduce the safe-haven appeal of the US dollar.
The next key catalyst for the AUD/USD exchange rate will be the upcoming Federal Reserve interest rate decision on Wednesday. Investors have penciled a 0.25% interest rate cut and the end of quantitative tightening in this meeting.
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Two key numbers have contributed to the rising odds of Fed cuts. A report released on Friday showed that US inflation rose at a slower pace than expected in September. Another report by ADP showed that the private sector shed over 36,000 jobs in September.
The most important Australian data will come out on Thursday when the statistics agency will publish the latest inflation report for the third quarter. This report will help the Reserve Bank of Australia in its meeting next week.
AUD/USD Technical Analysis
The daily timeframe chart shows that the AUD/USD exchange rate has rebounded after bottoming at 0.6440 on October 14. This was an important support level as it coincided with the ascending trendline that connects the lowest swings since April this year.
The pair rose and moved above the 50-day Exponential Moving Average (EMA), a sign that bulls have taken over. Also, the Relative Strength Index has moved above the key point at and is facing upwards.
Therefore, the most likely AUD/USD forecast is where it continues rising as bulls target the next key resistance at 0.6650.
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