Bearish View
- Sell the AUD/USD pair and set a take-profit at 0.6285.
- Add a stop-loss at 0.6435.
- Timeline: 1 day.
Bullish View
- Buy the AUD/USD pair and set a take-profit at 0.6435.
- Add a stop-loss at 0.6285.
The AUD/USD exchange rate continued its strong sell-off after the moderately dovish Reserve Bank of Australia (RBA) interest rate decision. It also continued falling as traders focus on the upcoming Fed decision. It moved to a low of 0.6350, its lowest level since November 2.
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RBA and Fed Decisions
The AUD/USD pair dropped after the RBA left interest rates unchanged in its final meeting of the year last week. It continued its pause, but hinted that a rate cut was coming as inflation moves near its 2% target.
The pair also dropped after the strong jobs numbers. According to the statistics agency, the unemployment rate dropped from 4.1% to 3.9% in November, better than the median estimate of 4.2%.
The employment change rose from 12.2k in October to 35.6k in November, also higher than the expected 26k. However, the participation rate dropped slightly from 67.1% to 67%.
The next key catalyst for the AUD/USD pair will come out on Monday when S&P Global will release the flash manufacturing and services PMI data. Economists expect the data to show that the manufacturing PMI dropped slightly to 49.4, while the service one fell slightly to 55.7.
The biggest event this week will be the Federal Reserve interest rate decision on Wednesday. In it, economists expect the bank to cut interest rates again because of the ongoing woes in the labor market. The unemployment rate has risen to 4.2%, higher than where it was a few months ago.
This will also be an important meeting because it will provide more information about what to expect in 2025.
AUD/USD Technical Analysis
The AUD/USD exchange rate has been in a strong bearish trend in the past few days. It crossed the important support level at 0.6350, its lowest swing on August 5. It has also formed a death cross pattern as the 50-day and 200-day moving averages crossed each other.
The MACD indicator has moved below the zero line, while the Relative Strength Index (RSI) has tilted downwards. It remains below 50. Therefore, the pair will likely continue falling as sellers target the next psychological point at 0.6300.
The alternative scenario is where the pair bounces back as investors buy the dip. If this happens, the pair will rise, retest 0.6500, and resume the downtrend.
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