Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6350.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6350.
- Add a stop-loss at 0.6600.
The AUD/USD exchange rate has formed an ascending channel as the US dollar index (DXY) has pulled back in the past few weeks. The pair was trading at 0.6487 on Monday, up by almost 10% from its lowest point this year.
US economic data and Federal Reserve decision
The AUD/USD exchange rate drifted upwards after a series of important economic data from the United States. Last week’s report showed that the headline consumer price index (CPI) rose slightly from 2.3% in March to 2.4% in April, missing the expected 2.5%. Core inflation, which excludes the volatile food and energy products, remained unchanged at 2.8%.
The next key data to watch will come out on Tuesday when the US publishes the latest retail sales, industrial, and manufacturing production data. Economists expect the data to reveal that the headline retail sales dropped to minus 0.7% in May from 0.1% in April as the impact of tariffs emerged.
These numbers will come a day before the Federal Reserve meets and delivers its interest rate decision. Economists expect the bank to maintain a hawkish tone in this meeting as it observes the impact of Trump’s tariffs on inflation.
The AUD/USD pair will react to the latest jobs numbers from Australia, which are expected on Thursday. Economists expect the data to show that the economy created 25,000 jobs, down from 89,000 in the previous month. The unemployment rate is expected to remain at 4.1%.
AUD/USD technical analysis
The daily chart shows that the AUD/USD exchange rate has been in an uptrend in the past few weeks. It has moved from a low of 0.5932 in April to a high of 0.6545, its highest swing since November last year.
The pair has formed an ascending channel and is now in its middle point. It remains above the 50-day and 25-day Exponential Moving Averages (EMA).
It has also moved between the 50% and 61.8% Fibonacci Retracement level, while the MACD and the Relative Strength Index (RSI) have moved downwards.
Therefore, the pair will likely remain in this range this week. A bullish breakout may see it jump to 0.6600, while a drop below the ascending channel will see it drop to 0.6400.
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Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
