Bullish View
Buy the AUD/USD pair and set a take-profit at 0.7350.
Add a stop-loss at 0.7200.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 0.7240 and a take-profit at 0.7150.
Add a stop-loss at 0.7300.
The AUD/USD pair tilted upwards in the overnight session even after the latest surge of Australian Covid-19 cases. The pair is trading at 0.7265, which is about 1.1% above the lowest level this week.
Australia Covid Cases
The Australian government confirmed a record number of cases on Wednesday. The country had more than 47,000 cases on Tuesday, which was higher than the 7-day average of about 38,000. As a result, Australia has started seeing more hospitalizations in the past few days.
The rising number of cases is in line with what other countries have reported recently. For example, the US is recording over 800k daily cases while the UK recorded over 200k cases. 1 in 15 people in the UK have the virus.
Worse, China, Australia’s biggest trading partner, is also seeing an uptick in cases. Because of its Covid-zero strategy, the country has announced a lockdown in Xi’an, a city with over 13 million people. This lockdown could have an impact on Australia’s exports in the near term.
There was no economic data published from Australia on Thursday. Therefore, it can be assumed that the current price action is mostly because of the US dollar. Indeed, the currency weakened across the board in the overnight session.
The biggest mover for the AUD/USD will be the upcoming non-farm payroll (NFP) data that will come out on Friday. The numbers are expected to show that the country added over 400k jobs in December even as the Covid-19 cases kept rising. The unemployment rate is expected to keep falling as the labor market tightens.
For example, initial jobless claims have declined to the lowest level since the pandemic started. Also, the number of vacancies across the country has jumped to over 10 million.
AUD/USD Forecast
The AUD/USD pair has been in a strong upward trend recently. It has risen by over 2% from its December lows. As a result, the pair has risen above the 50% Fibonacci retracement level. It also rose above the 25-period moving average and the Ichimoku cloud. Oscillators like the Relative Strength Index (RSI) have also risen.
Therefore, the pair will likely keep rising as bulls target the next key resistance level at 0.7340, which is along the 61.8% Fibonacci retracement level. This view will be invalidated if the price drops below the key support at 0.7230.
