Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7000.
Add a stop-loss at 0.6800.
Timeline:1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6800.
Add a stop-loss at 0.7000.
The AUD/USD exchange rate rose by 0.60% on Wednesday morning as market participants embraced a risk-on sentiment amid hopes that the US-Iran war was about to end. It rose to 0.6688, up substantially from this week's low of 0.6830.
Risk-On Sentiment Ahead of Key Data
The AUD/USD pair rose slightly as traders started predicting that the US-Iran war was ending. A report by the Wall Street Journal said that President Donald Trump was prepared to end the war even if the Strait of Hormuz remained closed.
In a separate statement, Trump hinted that he will leave the Strait closed for the Europeans and other countries to negotiate with Iran.
Still, there is a possibility that the US is using a delay tactic as more US troops arrive in the region. Such a move may lead to more risks in the region, which will push crude oil and natural gas prices higher.
The AUD/USD pair reacted to the latest macro data from the United States. A report by the Conference Board showed that consumer confidence rose to 91.8 in March, even as energy prices jumped. For example, the average gasoline prices crossed the important resistance level at $4 on Tuesday.
The JOLTs job openings report showed that the economy had over 6.86 million openings in February, down from the previous 7.24 million. A report by ADP is expected to show that the private sector created 40k jobs from the previous month's 63k.
The US will then release the latest US non-farm payrolls data on Friday. Economists see the report showing that the economy added 60k jobs after losing 90k in the previous month. This increase will be partly because of Kaiser Permanente staff who went back to work after a recent strike.
AUD/USD Technical Analysis
The daily timeframe chart shows that the AUD/USD pair has retreated in the past few weeks as the US-Iran war has continued. It moved from a high of 0.7185 on March 12 to a low of 0.6830 on March 30.
It has now formed a small bullish engulfing pattern, which is a common reversal sign in technical analysis. This rebound happened slightly above the 100-day Exponential Moving Average (EMA).
The Relative Strength Index (RSI) has reversed and pointed upwards to 41. Therefore, the pair will likely continue rising, potentially to the next key resistance level at 0.7000. A drop below the support level at 0.6830 will invalidate the bullish outlook.