Bullish View
- Set a buy-stop at 0.7568 and a take-profit at 0.7630.
- Add a stop-loss at 0.7500.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 0.7500 and a take-profit at 0.7450.
- Add a stop-loss at 0.7550.
The AUD/USD pair retreated during the Australian session as investors reacted to the latest Australian Manufacturing and Services PMI numbers and the new lockdown in Sydney. The pair fell to 0.7545, which was slightly lower than yesterday’s high of 0.7565.
Australia Delta Variant
Australia has recorded several coronavirus cases in the past few weeks. In a statement today, the New South Wales (NSW) government reported new 16 locally transmitted cases. As a result, several parts of the region will go through several restrictions in the near term. These include tough new restrictions on guests and a mask mandate for indoor events. Also, residents of seven local governments in Sydney will be barred from leaving the metropolitan area.
The new restrictions risk derailing the ongoing reopening of the country’s economy that is seeing a rebust recovery. Elsewhere, in Victoria, the government said that it will allow crowds at sporting venues. It also increased the number of people who will be allowed to go to theatres and other events like weddings.
The AUD/USD is also reacting to the latest PMI numbers. According to Markit, the preliminary Manufacturing PMI declined from 60.4 to 58.4 in June. Services PMIs declined from 58 to 56 because of the recent restrictions. Still, these numbers provide further signs that the Australian economy is on a swift recovery.
Analysts at Commonwealth Bank pointed to this data when they upgraded the country’s economy. They now expect the Australian Central Bank to raise interest rates by 0.15% for the first time in late 2022. This view was shared by analysts at Westpac, who see the bank starting to move in early 2023.
Later today, the AUD/USD will react to the US new home sales data and flash Manufacturing and Services PMIs. These numbers will come out a day after the US published relatively strong existing home sales data.
AUD/USD Technical Analysis
The AUD/USD has made a modest recovery after it declined sharply last week following the hawkish Federal Reserve decision. It is trading at 0.7545, which is slightly below the 23.6% Fibonacci retracement level. The pair has also remained below the 25-day and 50-day moving averages. Further, it is slightly above the important support at 0.7533, which was the lowest level on April 1. The pair also seems to be forming an inverse head and shoulders pattern. This means that it could bounce to the 38.2% Fibonacci retracement at 0.7630.
