Bearish View
Set a sell-stop at 0.7330 and a take-profit at 0.7250.
Add a stop-loss at 0.7400.
Timeline: 1-2 days.
Bullish View
Set a buy-stop at 0.7410 and a take-profit at 0.7500.
Add a stop-loss at 0.7350.
The AUD/USD remained in a tight range in the overnight session as Canberra state moved into lockdown after a positive COVID case. The pair is trading at 0.7363, which was slightly lower than Wednesday’s high of 1.3980.
Canberra Lockdown
The Australian government has been battling relatively new COVID cases that are putting a risk to the strong recovery. As part of its Covid-0 strategy, the country’s states have been announcing lockdowns as soon as a COVID case has been detected.
In a statement earlier today, the Canberra government said that the state will move into a seven-day lockdown as it attempted to do contact tracing. The goal is to prevent a significant spread of the COVID cases in the state. Other states in lockdown are Melbourne and New South Wales. In a statement, the Victoria government said that it will provide A$367 million business support program.
The AUD/USD pair also reacted to the relatively mild US inflation data. The numbers revealed that the Federal Reserve was relatively right in that consumer prices will start easing towards its 2% target in the next few months.
The headline CPI remained unchanged at a 2008 high of 5.3% while core inflation declined from 4.5% to 4.3%. The month-on-month CPI and core CPI also declined. Therefore, there is a possibility that the trend will continue as the Delta variant affects demand of key services. For example, the aviation sector has started seeing some weakness as more people continue are cancelling their vacations.
Later today, the AUD/USD will react to the latest initial jobless claims. The number is expected to show that the initial claims dropped from 385k to 375k last week. The continuing claims are expected to fall to 2.88 million. The pair will also react to the latest producer price index (PPI) data.
AUD/USD Technical Analysis
On the 1D chart, the AUD/USD pair has been in a tight range in the past few days. It has remained between the support and resistance levels at 0.7330 and 0.7410. The pair has formed what looks like a bearish flag pattern. It has also moved below the 25-day and 50-day moving averages. Therefore, the pair will likely remain in this range today ahead of the US PPI data. Eventually, there is a possibility that it will break out lower below 0.7300.
