Bearish view
Top Regulated Brokers
Sell the AUD/USD pair and set a take-profit at 0.6900.
Add a stop-loss at 0.7075.
Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7075.
Add a stop-loss at 0.6900.
The AUD/USD pair slumped to 0.6985, its lowest level since July 30. The decline has been steep since the pair peaked at 0.7238 earlier this month, and it continued even after the Reserve Bank of Australia (RBA) delivered its fourth interest rate hike.
RBA Rate Hike and US Macro Data
The AUD/USD pair continued its strong retreat after the Reserve Bank of Australia delivered its fourth interest rate hike of the year. It brought interest rates to 4.60%, the highest level in years, with Michele Bullock hinting that the bank may need to hike again. This view may come to pass as inflation remained at an elevated level in August.
A report released by the statistics agency showed that the monthly CPI rose from 3.5% in July to 4.2% in August. The trimmed and weighted mean CPI figures were also above the RBA’s target range of between 2% and 3%.
The AUD/USD pair is also falling as the US Dollar Index (DXY) continues its strong uptrend, reaching its highest level in weeks. This happened as US bond yields continued rising, with the 30-year hitting its highest level since 2002.
The next important news to watch will be the upcoming US inflation and jobs report. The Bureau of Economic Analysis (BEA) will publish the latest Personal Consumption Expenditures (PCE) report. This is a closely watched report because it is the Fed’s favorite inflation gauge. The BEA will also release the final estimate of Q2 GDP data.
ADP will also release the September private payrolls report. Economists expect this data to show that the private sector created 73k jobs after adding 38k in the previous month. This report comes two days before the US releases the official nonfarm payrolls data. A report released by the BLS on Tuesday showed that the number of job openings dropped to 7.07 million.
AUD/USD Technical Analysis
The AUD/USD pair has been in a downward trend after soaring to 0.7238 earlier this month. This retreat happened after it formed a rising wedge pattern, which is made up of two ascending and converging trendlines.
The pair has dropped below several key support points. It moved below the key support at 0.7074, its lowest level on September 16. It also slipped below the 50-day moving average of 0.7070.
The Relative Strength Index (RSI) has dropped to 31, its lowest level since June 29. Therefore, it seems like the downward trend is continuing as sellers target the psychological level of 0.6900.