Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6475.
- Add a stop-loss at 0.6550.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6515 and a take-profit at 0.6575.
- Add a stop-loss at 0.6470.
The AUD/USD exchange rate remained under pressure ahead of the upcoming Reserve Bank of Australia (RBA) interest rate decision. It retreated to a low of 0.6510 on Monday, down from last month’s high of 0.6797.
RBA interest rate decision ahead
The AUD/USD pair retreated after last week’s key events in the United States. In a report, the Bureau of Labor Statistics (BLS) showed that the number of job vacancies dropped in June while initial jobless rates rose in the previous week.
Another report showed that the economy created just 114k jobs in July, lower than the expected 175k. It was the lowest increase in months and a sign that the economy was not doing well.
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The unemployment rate rose to 4.3% while the average monthly earnings dropped to 3.4% during the month. These numbers came after the Fed left interest rates unchanged between 5.25% and 5.50%.
In his statement, Jerome Powell noted that the bank was willing to start cutting interest rates in its September meeting. Now, with the labor market deteriorating, investors anticipate that a 0.25% or even a 0.50% cut will come next month.
The next crucial AUD/USD news will be the upcoming RBA interest rate decision on Tuesday. That decision will come a few days after Australia published encouraging inflation data. According to the statistics agency, the trimmed and weighted inflation numbers slipped in July.
Therefore, the RBA is expected to leave interest rates unchanged at 4.35% for the sixth straight month. The bank will also likely maintain a hawkish tone now that inflation has started moving downwards. Most analysts expect the bank will start cutting in the first quarter of 2025.
AUD/USD technical analysis
The AUD/USD pair has been in a strong downward trend in the past few weeks. It has remained below the 25-period and 50-period moving averages. The pair has also formed a bearish flag pattern. It has also moved below the important support level at 0.6575, its lowest swing on June 10th.
On the positive side, the pair’s MACD has formed a bullish divergence pattern. Therefore, the pair will likely remain in this range ahead of the RBA interest rate decision. In this case, the key support and resistance points to watch are 0.6450 and 0.6550.
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