Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6865.
Add a stop-loss at 0.7100.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7100.
Add a stop-loss at 0.6865.
The AUD/USD pair wavered as traders reacted to the ongoing developments in the Middle East, where the US and Iran have continued their strikes. Ansah Allah, popularly known as the Houthis, also announced a new blockade against Saudi Arabia. It was trading at 0.7000, up by nearly 2% from its lowest point this month.
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Inflation Concerns Emerge as War Continues
Recent data from the United States and Australia showed that consumer inflation ticked lower as crude oil dropped. Brent and the West Texas Intermediate (WTI) dropped to $70 and $67, respectively, as the ceasefire between the US and Iran continued.
Oil prices have bounced back in the past few days as the US and Iran have continued their strikes. Media reports suggest that the US is sending more fighter jets and refueling planes to the region, a sign that Trump plans to escalate.
There are signs that oil prices will continue rising in the coming days as inventories are still falling. At the same time, Houthis have announced that they will block Saudi Arabian ships moving to and from the Red Sea.
Soaring oil prices will lead to a higher inflation rate in the US and Australia and put pressure on the central banks to hike interest rates. Odds that the Fed will hike interest rates this year have jumped to 55% on Polymarket.
There will be no major macro data from the United States this week as the statistics agencies have already released the recent inflation and jobs numbers.
As such, traders will react to the upcoming Australian jobs numbers on Thursday this week. Economists expect the data to show that the unemployment rate remained at 4.4% in June as the economy added 15.2k jobs. If this happens, it will be a big decline from the previous month’s 40.3k.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD pair has bounced back in the past few weeks, moving from a low of 0.6865 to the current 0.700. It has formed an ascending channel, which is part of the bearish flag pattern.
The pair has remained below the 50-day moving average and the 23.6% Fibonacci Retracement level. Also, the strength of the uptrend has eased as the Average Directional Index (ADX) has dropped to 25, its lowest level since June 9.
Therefore, the pair will likely have a bearish breakout, potentially to last month’s low of 0.6865. A move above the resistance at 0.7050 will invalidate the bearish outlook.
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