Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6515.
- Add a stop-loss at 0.6285.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6285.
- Add a stop-loss at 0.6515.
The AUD/USD exchange rate pulled back after hitting a key resistance level as the US dollar index rebounded as US tariffs on key countries near. The pair retreated to a low of 0.6355, down from this month’s high of 0.6410. So, what next for the Australian dollar after last week’s key events.
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US consumer confidence ahead
The AUD/USD had an eventful week after the Reserve Bank of Australia (RBA) delivered its first interest rate cut since 2020. It slashed by 0.25% and hinted that it will maintain a fairly hawkish tone because of the rising fears that inflation will start to rise.
The AUD/USD pair also reacted to the latest Australian jobs numbers. According to the Australian Bureau of Statistics (ABS), the economy created 44k jobs in January, a big increase from the expected 19.4k.
The participation rate improved to 67.3%, higher than the expected 67.1%, while the unemployment rate rose slightly to 4.1%.
The AUD/USD pair also reacted to the Federal Reserve minutes, which showed that most officials expect the bank to hold rates steady for a while. Fed officials are worried that US inflation will keep going up after Trump implements his tariffs.
The next key catalyst for the AUD/USD pair will be the potential trade agreements between the US, Mexico, and Canada. Trump has given these countries until February 28 to reach a deal with the US or risk a 25% tariff. A potential deal will likely be bearish on the US dollar, which is still seen as a safe haven currency.
There will be several important economic numbers this week. The most important one will be the US consumer confidence report scheduled on Tuesday. The others will be the new and existing home sales numbers and statements by several Fed officials.
AUD/USD technical analysis
The AUD/USD pair retreated after rising to the key resistance level at 0.6411, a crucial level that coincided with the 38.2% retracement point. It is common for an asset to pull back slightly after hitting a crucial resistance point.
The pair has remained above the 50-day Exponential Moving Average (EMA), a sign that bulls are in control. Also, the MACD indicator has moved above the zero line, while the Relative Strength Index (RSI) has moved closer to the overbought point.
Therefore, the pair may keep rising as bulls target the 50% retracement level at 0.6515. A drop below the 50-day moving average will invalidate the bullish view.
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