Bullish View
Buy the AUD/USD and set a take-profit at 0.7350.
Add a stop-loss at 0.7200.
Timeline: 1-2 days.
Bearish View
Sell the AUD/USD and set a take-profit at 0.7180.
Add a stop-loss at 0.7300.
The AUD/USD pair tilted lower on Monday as concerns about the Covid-19 pandemic in Australia rose. The pair is trading at 0.7250, which is a few points below last week’s high of 0.7277.
Australia Covid Concerns
There are heightened concerns about the Covid-19 pandemic in Australia. Recent data showed that the number of cases in all provinces has jumped. Earlier on Monday, the government confirmed more than 35,000 new cases. That was the biggest daily increase since the pandemic started.
In New South Wales, the number of cases jumped by more than 20,000 while in Victoria, the number rose to more than 8,500. Queensland reported more than 8,500 cases while South Australia recorded about 2,552 cases.
According to the Victorian health official, the number of cases recorded this year was higher than those recorded in 2021. Still, while the number of cases has risen, the number of deaths remains substantially low. The country recorded just 14 Covid-19 deaths on Sunday.
The Australian government also unveiled new measures to curb the spread of the disease. These measures include mask mandates and encouraged more vaccinations. At the same time, the government said that it will not provide PCR tests for free. In a statement, the country’s prime minister said the government had provided billions of dollars to support Australians during the pandemic.
The next key catalyst for the AUD/USD pair will be the latest interest rate decision by the Reserve Bank of Australia (RBA). Analysts expect that the bank will continue with its quantitative easing (QE) as it continues with its support for the economy. In its most recent decision, the bank said that it will end QE. Also, the bank is expected to leave interest rates unchanged.
AUD/USD Forecast
The AUD/USD pair declined to a low of 0.7250, which is slightly below the ascending trend line. The pair has moved slightly below the 50% Fibonacci Retracement level. It has also moved slightly above the 25-day and 50-day moving averages while the MACD has continued to decline. It has also tested the lower side of the small ascending channel.
Therefore, the pair will likely resume the bullish trend as bulls target the key resistance at 0.7350, which is slightly below the 61.8% retracement level. This view will be invalidated if it moves below the key support at 0.7230.
