Bullish View
- Buy the BTC/USD and set a take-profit at 0.7345.
- Add a stop-loss at 0.7200.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 0.7250 and a take-profit at 0.7200.
- Add a stop-loss at 0.7300.
The AUD/USD price jumped to a key resistance level as the US dollar sold off following the strong American inflation data. The pair is trading at 0.7275, which was the highest level since December 31st. It has risen by over 2% above the lowest level this year.
US Dollar Retreats
The AUD/USD pair rose primarily because of the overall weakness of the US dollar. The greenback declined against most currencies like the euro, sterling, and the New Zealand dollar. The US Dollar Index, which tracks the US dollar against a basket of currencies declined by more than 0.60% in the overnight session.
The currency declined sharply after the US Bureau of Labor Statistics confirmed that inflation was still surging in the country. The headline CPI rose from 6.8% in November to 7.0% in December. This figure was in line with what analysts were expecting. It was also the smallest pace of increase in a few months.
The core consumer inflation data jumped from 4.9% to 5.5% in December. Also, this increase was better than the median estimate of 5.4%. This figure excludes volatile food and energy products.
Still, analysts believe that inflation has jumped at a faster pace than official numbers. For example, home prices in most American cities have jumped by over 18% year-on-year in the past few months. Similarly, rental prices have also jumped by double-digits in the past few months.
The same trend has happened in Australia, where the cost of most products has been in a strong bullish trend lately. The most recent data showed that the country’s inflation rose by almost 5% in the third quarter.
Later today, the AUD/USD pair will react to the latest US producer price index (PPI) data. Economists expect the data to show that prices rose by 9.8% in December.
AUD/USD Forecast
The four-hour chart shows that the AUD/USD pair made a bullish breakout on Wednesday after the latest inflation data. The pair is trading at 0.7278, where it struggled moving above in December. It has managed to move above the 25-day and 50-day moving averages. Also, the price is at the 50% Fibonacci retracement level. The Relative Strength Index (RSI) has moved above the overbought level.
Therefore, the pair will likely keep rising as bulls target the key resistance at 0.7345, which is along the 61.8% retracement level.
