Bullish case
Buy the AUD/USD because of the ascending triangle pattern.
Target the upper side of the triangle at 0.7800.
Have a stop-loss at 0.7700.
Bearish case
Set a sell stop at 0.7700.
Add a take-profit at 0.7650, which is the lowest level on January 18.
Set a stop-loss at 0.7800.
The AUD/USD is holding steady ahead of the important Australian inflation and Export Price Index data scheduled for this week. It is also rising ahead of the Fed interest rate decision set for Wednesday and the US GDP data. The Aussie is trading at 0.7735 against the dollar.
Australia Inflation Numbers Ahead
The Australian dollar is rising even as the number of coronavirus cases in China keeps rising. According to the National Health Commission, the country reported 124 cases on Sunday, up from 80 in the previous day. While the country is facing its worst wave since March last year, economists believe that it will not have a meaningful impact on the economy. This is in turn a good thing for Australia, which sells most of its goods to China.
The AUD/USD will this week react to economic data from the United States and Australia. In Australia, the Bureau of Statistics will publish the country’s Consumer Price Index data on Wednesday. Expectations are low. The median estimate is that consumer prices rose by 0.7% in the fourth quarter, which is lower than the RBA target of 2.0% The trimmed mean CPI is expected to have risen by 1.2% in the quarter. On Thursday, the bureau will release the fourth quarter Export and Import Price Index data.
Meanwhile, in the United States, the AUD/USD will react to the Fed interest rate decision that will come out on Wednesday. Judging by the recent statements by Jerome Powell, the bank will leave rates and quantitative easing policies unchanged to support the recovery. The pair will also react to US GDP numbers that will come out on Thursday.
AUD/USD Technical Outlook
The AUD/USD rose to 0.7735 in early trading today. On the four-hour chart, the price is above the ascending purple trendline that joins the lowest swings since November. The pair also seems to be forming an ascending triangle pattern whose resistance is at ~0.7800. The uptrend is also being supported by the 25-period moving averages.
Therefore, the pair will likely continue rising as bulls target the upper side of the triangle at 0.7800. This prediction will be invalidated if the price falls below 0.7695, which is the lowest level on Friday.
