Bearish View
Set a sell-stop at 0.7085 and a take-profit at 0.7000.
Add a stop-loss at 0.7100.
Timeline: 1-2 days.
Bullish View
Set a buy-stop at 0.7150 and a take-profit at 0.7250.
Add a stop-loss at 0.7050.
The AUD/USD price held steady on Wednesday morning as investors reflected on the latest minutes by the Reserve Bank of Australia (RBA). The pair also reacted to the rising number of Covid-19 cases in the United States and Australia. It is trading at 0.7140, which is slightly above last Friday’s low at 0.7082.
Rising COVID Cases
The AUD/USD pair rose after Australia’s prime minister, Scott Morrison, ruled out new Covid-19 lockdowns even as experts expect numbers to rise.
While the number of daily cases has declined recently, some experts expect that the daily number could increase by about 200k per day in the coming weeks. The estimate was from the Doherty Institute. If this happens, more than 4,000 people would need hospital treatment and about 8,000 people will be admitted in Intensive Care Unit (ICU).
The pair also rose after the latest minutes by the RBA. The minutes showed that the base case for the bank is that it will end its quantitative easing (QE) program in May next year. The other option is that the bank could scrap the QE program altogether in February depending on economic numbers.
Also, the bank hinted that it will taper the asset purchases in February’s meeting and then wind down the asset purchases in May.
The next key catalyst for the AUD/USD pair will be the latest US consumer confidence data by the Conference Board. Economists expect the data to show that confidence rose from 109.5 in November to 110.8 in December. Still, with the number of Covid cases rising, there is a likelihood that confidence will retreat.
The pair will also react to the final reading of the US GDP data. Economissts expect the data to show that the economy expanded by 2.1% in the third quarter. Still, the impact of these numbers on the pair will be relatively muted.
AUD/USD Forecast
The four-hour chart shows that the AUD/USD pair declined to a low of 0.7088 on Monday. This was an important level since it was also the lowest level on December 14th. The pair bounced back and is trading at 0.7140. It has moved to the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved above 50.
Still, the outlook for the pair is bearish and there is a likelihood that it will slip below the support at 0.7088.
