Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7250.
Add a stop-loss at 0.7100.
Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.7100.
Add a stop-loss at 0.7250.
The AUD/USD pair continued its uptrend on Tuesday as investors reacted to the rising US-Iran deal. It also rose as traders waited for the US consumer confidence report and the Australian consumer inflation report. It was trading at 0.7175, up from this month’s low of 0.7080.
Top Regulated Brokers
Australia Consumer Inflation Report
The AUD/USD pair rose slightly, a sign that investors have embraced a risk-on sentiment as odds that a deal between Iran and the US will be reached in the coming days. The two are negotiating a move that will reopen the Strait of Hormuz in exchange for some concessions from the US.
Hopes of a deal have jumped in the past few days as the two sides have continued their negotiations. Such a move will lead to lower prices, which will lead to lower consumer inflation in the United States and Australia. A report released earlier this month showed that the headline consumer inflation rose to 3.8% in April.
The pair will next react to the upcoming US consumer confidence and house price index report. Economists expect the data to show that consumer confidence dropped sharply in May as inflation remained elevated. The gasoline price has risen to $4.50.
The AUD/USD pair also rose ahead of the Australian consumer inflation report later this week. Economists expect the upcoming report to show that the headline Consumer Price Index (CPI) rose to 4.6% in the first quarter. The trimmed and weighted mean inflation is expected to come in at 4.40% and 3.6%, further away from bank’s target of 2.0%.
These inflation numbers puts the Reserve Bank of Australia in a difficult position as hiking rates will be hard. A report released last week showed that the Australian economy shed jobs while the unemployment rate rose.
AUD/USD Technical Analysis
The AUD/USD pair rose slightly, reaching its highest point since May 15. It has jumped from a low of 0.708o and moved slightly above the 50-day Exponential Moving Average.
The pair has also slowly formed an inverted head-and-shoulders pattern. This is a common bullish reversal pattern in technical analysis. The Relative Strength Index (RSI) has continued rising.
Therefore, the pair will likely continue rising as bulls target the key resistance at 0.7250. A move above that level will point to more gains, potentially to the year-to-date high of 0.7278.
Ready to trade our daily Forex signal? Here’s a list of some of the best Australian forex brokers to check out.