Bearish View
Sell the AUD/USD and add a take-profit at 0.7150.
Add a stop-loss at 0.7350.
Timeline: 1-2 days.
Bullish View
Set a buy-stop at 0.7250 and a take-profit at 0.7350.
Add a stop-loss at 0.7150.
The AUD/USD pair has been in a major bearish trend recently. The pair is trading at 0.7220, which is the lowest it has been since October this year. It has crashed by more than 4.40% from its highest level in October.
US Dollar Strength
The main reason why the AUD/USD pair has crashed hard in the past few weeks is the strong US dollar. The greenback has jumped against most developed and emerging market currencies as investors price in a more hawkish Fed. Indeed, after his nomination, Jerome Powell could embrace a more hawkish tone in a bid to tame inflation.
At the same time, the Reserve Bank of Australia (RBA) has stayed its ground. While it has tightened a bit, the bank has maintained that it will hike interest rates in 2024. By that time, the Fed’s dot plot shows that it will have made between 6 and 7 interest rate hikes.
Still, there is a likelihood that the RBA will tighten as soon as in 2022. Besides, the economy is doing well as evidenced by the latest manufacturing and services PMI numbers. Data published by Markit on Tuesday showed that the country’s manufacturing PMI rose from 58.2 to 58.5 in November.
The crucial services PMI rose from 51.8 to 55.0. This trend will likely continue as the country opens to foreign travellers. This will lead to more demand for services like hotels, restaurants, and tourism. At the same time, home prices have surged to a record high, which will motivate the RBA to act.
The AUD/USD pair will today react to the latest data dump from the United States. These numbers will come out today because of the Thanksgiving weekend. The key ones to watch will be the initial jobless claims, durable goods orders, and GDP data.
AUD/USD Forecast
The AUD/USD price has been in a major sell-off recently. Consequently, the pair has managed to move between the pivot point and the first support. The downward trend is also being supported by the Ichimoku cloud and the 25-day moving average. Additionally, the pair is between the descending channel that is shown in red.
Therefore, the pair will continue moving in a bearish trend as long as it is below the Ichimoku cloud and the 25-day moving average. The next key level to watch will be at 0.7150, which is at the S2.
