Bullish View
- Buy the AUD/USD and set a take-profit at 0.7500.
- Add a stop-loss at 0.7350.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 0.7400 and a take-profit at 0.7300.
- Add a stop-loss at 0.7450.
The AUD/USD pair continued its new bullish trend on Thursday morning as the US dollar started stabilizing. The pair rose to a high of 0.7445, which was slightly above this week’s low of 0.7345. It remains significantly below the highest point this week.
Australian Economic Recovery
On Tuesday, the International Monetary Fund (IMF) published a relatively dovish outlook of the global economy. It noted that the economy will expand by 3.6% this year, a few points lower than its previous estimate.
It also expects that the Australian economy will slow down due to the ongoing Covid-19 pandemic in China. Precisely, it sees the economy expanding by 4.2% this year, which is in line with the expectations by the Reserve Bank of Australia.
The country’s economy will be helped by the relatively high commodity prices and the fact that the services sector is expected to do well. Australia reopened its borders to vaccinated people in the first quarter of the year. Analysts expect that the RBA will upgrade its view in its May meeting. They also expect that the bank will start hiking interest rates in June this year.
The biggest concern for the Australian economy is that inflation is surging. The most recent data showed that it rose to 3.5% in the fourth quarter. The Australian Bureau of Statistics (ABS) will publish the latest inflation data next week.
The AUD/USD pair rose as the strong bullish momentum eased. The dollar index has dropped to about $99.7, which is substantially lower than the highest point this week. In fact, the dollar has retreated against most currencies like the euro, Japanese yen, Canadian dollar, and the British pound. The next key catalyst will be a speech by Jerome Powell.
AUD/USD Forecast
The AUD/USD pair has made a steady recovery in the past few days. It is trading at 0.7447, which is slightly above the lowest point this week. It has moved slightly above the 25-day and 50-day moving averages. It has also moved above the ascending trendline shown in black. The MACD has moved slightly above the neutral level.
At the same time, the pair is along the highest point in March. Therefore, the pair will likely keep rising as investors target the psychological level of 0.7500. In the medium-term, however, the bearish trend will likely resume.
