Bearish View
- Sell the AUD/USD pair and set a take-profit at 0.6400.
- Add a stop-loss at 0.6600.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 0.6540 and a take-profit at 0.6600.
- Add a stop-loss at 0.6400.
The AUD/USD exchange rate continued its strong downtrend as the US dollar index rally gained steam. It fell to 0.6530, down by almost 6% from the highest level this year. It is hovering near its lowest level since August 8.
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The pair’s sell-off continued its downward trend because of the surging US dollar as investors embraced a risk-off sentiment after Donald Trump’s election. The biggest risk is his proposed tariffs, which could impact most countries, including Australia.
The AUD/USD exchange rate has moved downwards as investors waited for the upcoming US consumer price index (CPI) data. Economists expect the data to show that the headline CPI rose from 2.4% in September to 2.6% in October as services prices jumped.
Core inflation, which excludes the volatile food and energy, is expected to remain at 3.3%, much higher than the Fed’s target of 2.0%.
These numbers will have some impact on the next Federal Reserve meeting, which is scheduled to happen on December 18. Economists expect the bank to slash interest rates by 0.25% to between 4.25% and 4.50%.
The AUD/USD pair also pulled back after the latest Australian Wage Price Index (WPI) data. These numbers showed that the index retreated from 4.1% in Q2 to 3.5% in the third quarter.
The data will come ahead of the country’s jobs data. Economists see the data showing that the unemployment rate remained at 4.1% as the economy created 25.2k jobs.
AUD/USD Technical Analysis
The AUD/USD pair continued its downward trend in the past few days. It has dropped from the September high of 0.6942 to 0.6530, its lowest level since August 8. The pair has moved below the bottom of the trading range at 0.6530.
It has also created a rising broadening wedge, which is a popular bearish sign in the market. Additionally, the pair has moved to the lower side of this wedge. The 50-day and 200-day Weighted Moving Averages (WMA) have formed a death cross chart pattern.
The AUD/USD’s Relative Strength Index and the MACD indicators have all pointed downwards. Therefore, the pair will likely continue falling as sellers target the weak, stop & resistance point at 0.6400. The stop-loss of this view is 0.6615.
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