Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6400.
- Add a stop-loss at 0.6600.
- Timeline: 1-2 days.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6400.
The AUD/USD came under pressure as investors rushed to the safety of the US dollar and after the Reserve Bank of Australia (RBA) delivered its interest rate decision. It dropped below the important support level at 0.6500, down from last week's high of 0.6615.
ADP Jobs and PMI Data Ahead
The AUD/USD exchange rate pulled back after the RBA delivered its interest rate decision. As was widely expected, the bank decided to leave interest rates unchanged at 3.6%.
The decision came a few days after the statistics agency published a strong consumer inflation report. Data showed that the headline Consumer Price Index (CPI) rose to 3.2% in the fourth quarter, while the trimmed mean rose to 3%.
The bank also warned that inflation may remain higher for longer, which may affect the pace of interest rate cuts. Analysts largely expect the bank to cut interest rates in 2026.
The AUD/USD pair crashed as investors moved to the safety of the US dollar as a risk-off sentiment prevailed, pushing the stock market much lower. Top US indices like the Dow Jones and Nasdaq 100 dropped by over 1.25%, with AI companies leading the plunge.
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Looking ahead, the next key catalyst for the pair will be the upcoming ADP private payrolls data. Economists expect the report to show that the private sector created 25k jobs in October after shedding over 32,000 in the previous month.
The other key news to watch will be the upcoming US services and composite PMI numbers, which will provide more information about the health of the American economy. These numbers will come a week after the Fed decided to cut interest rates by 0.25%.
AUD/USD Technical Analysis
The daily timeframe chart shows that the AUD/USD pair has been under pressure in the past few days. It has moved from a high of 0.6705 in September to below 0.6500 today.
The pair has formed a head-and-shoulders pattern, which is a common bearish sign. It has moved below the 50-day Exponential Moving Average (EMA) and the Supertrend indicator. The Percentage Price Oscillator (PPO) has dropped and moved below the zero line.
Therefore, a combination of a H&S pattern, Supetrend, and the PPO indicators points to more downside, potentially to the psychological level at 0.6400. A move above the resistance level at 0.6600 will invalidate the bearish outlook.
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