Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6750.
Add a stop-loss at 0.7000.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7000.
Add a stop-loss at 0.6750.
The AUD/USD pair remained under pressure, trading at its lowest level since April 6. It fell to 0.6890 from its year-to-date high of 0.7276 as traders focused on the upcoming US consumer confidence data and remarks by Kevin Warsh, the Federal Reserve Chair.
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Aussie Falls Ahead of US Consumer Confidence Data
The Australian dollar retreated after the Reserve Bank of Australia (RBA) delivered minutes of the last meeting. These minutes provided more information on what officials deliberated in that meeting, in which they decided to leave rates unchanged for the first time this year. They had previously hiked interest rates in all meetings.
The minutes showed that officials predict that they will maintain rates unchanged at the current level. Nonetheless, they left the door open for future interest rate hikes if inflation remained stubbornly high. This is unlikely since crude oil prices have retreated in the past few months, with Brent and the West Texas Intermediate (WTI) falling below $80.
The AUD/USD pair will be in the spotlight ahead of the upcoming US consumer confidence and housing data. Economists expect the report to show that consumer confidence improved slightly this month because of the falling crude oil prices and the strong labor market.
Recent data showed that the US economy created over 172k jobs last month as the unemployment rate remained at 4.3%. The labor market has been stronger than expected in the previous three months.
Looking ahead, the next key catalyst for the pair will be the upcoming statement from Kevin Warsh in his first foreign trip as the Fed Chair. He will talk at the ECB Summit in Portugal this week. The US will also release the latest non-farm payrolls (NFP) numbers on Thursday, providing more color on the state of the economy.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has been in a downward trend in the past few weeks, moving from the year-to-date high of 0.7276 in May to the current 0.6886. It has recently dropped below the 50-day moving average and is nearing the crucial support level of 0.6830, its lowest level on March 30th.
The MACD and the Relative Strength Index (RSI) have continued falling this month. The RSI has moved below the oversold level, while the two lines of the MACD moved below the zero line. Therefore, the pair will likely continue falling, potentially to the support of 0.6800.
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