Bearish View
Sell AUD/USD and set a take-profit at 0.7150.
Add a stop-loss at 0.7300.
Timeline: 1-2 days.
Bullish View
Buy the AUD/USD and set atake-profit at 0.7300.
Add a stop-loss at 0.7200.
The AUD/USD pair retreated slightly on Wednesday morning amid low volumes. The pair is trading at 0.7230, which is about 0.50% below the highest level this week.
Omicron Variant Ease
The AUD/USD declined as fears of the Omicron variant eased. Recent reports have shown that while the Omicron variant is spreading fast, its symptoms are relatively mild. Also, data shows that the number of hospitalization and deaths have been relatively low in the past few weeks.
This is likely the reason why the Centers for Disease Control (CDC) announced a new guidance on quarantine measures. The agency said that it was shortening the number of quarantine days from 10 days to five days.
It also recommended that people with fading symptoms could leave their homes as long as they had masks. It argued that its reports showed that most transmission occurs early in the course of illness.
The AUD/USD pair also tilted lower after the latest US home prices numbers. While the number of home sales has jumped, prices have declined slightly in the past three straight months. The Case-Shiller National Home Price Index (HPI) rose by 19.1%.
This was the third straight month that prices have declined. Still, home prices have jumped substantially in the past two years, helped by low interest rates and poor supplies. The same trend has happened in Australia, where prices have risen sharply in key cities like Sydney and Melbourne.
There will be no economic data from Australia. Therefore, the key data to watch will be the latest US mortgage index data. The country will also publish the latest pending home sales and wholesale inventories data. Still, the impact of these numbers to the pair will be muted.
AUD/USD Forecast
The four-hour chart shows that the AUD/USD pair has been in a tight range recently. It is between the 38.2% and 50% Fibonacci retracement levels. It is also between the standard pivot point and the first resistance. The Relative Strength Index (RSI) also declined below the overbought level of 70.
Most importantly, the AUD/USD pair moved below the upper side of the ascending channel. It is also slightly above the 50-day moving averages. Therefore, the pair will likely keep dropping as bears target the lower side of the channel at 0.7175. This view will be invalidated if the price rises above this week’s high of 0.7260.
