Bullish View
- Buy the AUD/USD pair and set a take-profit at 0.7500.
- Add a stop-loss at 0.7300.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 0.7350 and a take-profit at 0.7300.
- Add a stop-loss at 0.7400.
The AUD/USD pair has defied gravity in the past few days as global commodities rise. The pair is trading at 0.7375, which is the highest point it has been since November 2021. It has jumped by over 5.90% from the lowest level this year.
Commodity Prices Jump
Australia is one of the most endowed countries in the world. It has vast coal, natural gas, iron ore, gold, and aluminum. Therefore, the country does well when the commodities market is flourishing. This is why Australia is often seen as a barometer of commodities.
In the past few weeks, the prices of most commodities has jumped sharply as the crisis in Ukraine continues. For example, the price of natural gas has risen to a record high because Russia is the biggest supplier in Europe.
Iron ore, copper, coal, and gold have also surged. As a result, the closely watched Bloomberg Commodity Index has jumped to the highest level in over a decade.
Still, like all countries, Australia will suffer quite a bit as prices increase. For one, the country is a leading importer of crude oil, meaning that its positives in other commodities will be offset by oil. At the same time, since the country has an open economy, it means that it will see higher inflation. In its meeting last week, the RBA estimated that inflation will remain above 3% for a while.
The AUD/USD pair also rose even after the strong jobs numbers from the United States. Data showed that the economy added more than 600k jobs in February while the unemployment rate has fallen to 3.8%, which was the lowest level since the pandemic started. Therefore, judging by Jerome Powell’s statement, there is a likelihood that the Fed will be more hawkish than the RBA.
AUD/USD Forecast
The daily chart shows that the AUD/USD pair has been in a strong bullish trend in the past few months. The pair’s bullish trend accelerated last weekend when it moved above the key resistance at 0.7313, which was the highest level on January 13th. The pair has also moved above the 25-day and 50-day moving averages while the RSI has risen above the overbought level.
Therefore, the AUD/USD pair will remain in a bullish trend as long as it is above the two moving averages. The next key resistance to watch will be at 0.7500.
