Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6300.
- Add a stop-loss at 0.6400.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 0.6400 and a take-profit at 0.6500.
- Add a stop-loss at 0.6300.
The AUD/USD price crashed to the lowest level since 2020 as the US dollar strength continued and commodities pulled back. It dropped to a low of 0.6355, which was much lower than last week’s high of 0.6538.
Strong US dollar crashes the Aussie
The AUD/USD price has been in a strong bearish trend in the past few days. The sell-off accelerated on Friday after the US published strong jobs numbers. These numbers revealed that the economy added over 265k jobs in September while the unemployment rate dropped to 3.5% in September. Wage growth slowed but remained at an elevated level.
Therefore, analysts expect that the Federal Reserve will continue hiking interest rate since inflation is still at an elevated level. The most recent data showed that American inflation remained close to its highest level in decades. And the decision by OPEC+ to lower its oil output will likely push oil prices higher. Indeed, the price of Brent has risen by about $10 in the past few days.
The AUD/USD price will likely react to the latest American inflation numbers that are scheduled for later this week. Analysts expect that inflation remained above 6% in September while core CPI rose by about 200 basis points.
Since there will be no major data and events from Australia, the pair will also react to the upcoming FOMC minutes. The minutes are expected to show that Fed officials maintained a hawkish tone in its most recent meeting. In it, the bank decided to hike interest rates by 0.75% for the third straight meeting.
The most recent Fed speakers insisted that more rate hikes were necessary. Jerome Powell hinted that the bank will likely deliver another 0.75% hike in November and 0.50% in December. As such, this is a divergence from this month’s RBA pivot.
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. It managed to move below the lower side of the symmetrical triangle pattern shown in yellow. The pair also moved below the 25-day and 50-day moving averages. The Relative Strength Index (RSI) and MACD have been in a downward trend.
Therefore, the pair will likely continue falling as sellers target the next key support at 0.6300. The stop-loss for this trade is at 0.6400.
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