Bearish View
- Sell the AUD/USD and set a take-profit at 0.7200.
- Add a stop-loss at 0.7370.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 0.7345 and a take-profit at 0.7450.
- Add a stop-loss at 0.7265.
The AUD/USD pair remained under intense pressure last week after the strong American inflation data and as demand for safe havens rose amid the fighting in Ukraine. The pair fell to a low of 0.7291, which was lower than last the month-to-date high of 0.7445.
Fed and RBA to Be in Focus
The Federal Reserve and the Reserve Bank of Australia (RBA) will be the main catalyst for the AUD/USD pair this week. On Tuesday morning, the RBA will publish its minutes of the past meeting.
These minutes will provide a deeper look at what happened and what officials expect in the coming months. In the meeting, the bank decided to leave interest rates unchanged and warned about the impact of the ongoing crisis in Europe on inflation. It hinted that it will only hike interest rates when real inflation remains solidly above 2%.
The Fed, on its part, will start its monthly meeting on Tuesday and deliver its decision on Wednesday. This will be an important meeting because of the ongoing changes in the American economy. The labor market has tightened significantly in the past few months. As a result, the unemployment rate has dropped to 3.8% while wage growth is still strong.
Therefore, the Fed will not be concerned about the labor market. Instead, officials will focus on inflation, which continues moving in an upward trend. Last week, data by the Bureau of Labor Statistics showed that the country’s inflation surged to 7.9% in February.
It also warned that the situation was not getting much better considering that the average gasoline price has soared to over $4. The prices of most other commodities has also risen dramatically as the conflict in Ukraine has risen.
Therefore, while the US and Australia will publish data on retail sales and employment, their impact on the AUD/USD will be minimal.
AUD/USD Forecast
The four-hour chart shows that the AUD/USD pair has been in a strong bearish trend in the past few days. The pair has crashed by about 2% from its highest level this week. It has also managed to move below the key support at 0.7315, which was the highest point on January 13th.
The pair has also declined below the 25-day and 50-day moving averages while the Stochastic oscillator has moved to the oversold level. Therefore, there is a likelihood that the pair will maintain a bearish trend in the coming days.
