Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6400.
- 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 remained unchanged before the Federal Reserve interest rate decision and Australian jobs numbers. The pair was trading at 0.6475 on Wednesday, down from the year-to-date high of 0.6545.
Fed Decision and Australia Jobs Data
The AUD/USD pair remained in a tight range as traders waited for the upcoming Federal Reserve interest rate decision. Analysts anticipate the Fed will leave the interest rate unchanged between 4.25% and 4.50%.
The bank may change its tune on when it will cut interest rates after the recent economic data. Last week’s data showed that the headline Consumer Price Index (CPI) rose slightly from 2.3% in April to 2.4% in May as the impact of tariffs on the US economy started to show.
More data released on Tuesday showed that the US retail sales dropped by the most in two years. Sales stood at $715 billion in May, down by 0.9% from April, the biggest decline since March 2023. Analysts cited the retreat to the tariff-led frontloading, when Americans bought items before his tariff announcement.
Another report showed that the industrial production was also worse than expected, as it slumped by 0.2%. Therefore, the Fed may decide to tweak its monetary policy statement.
The other key catalyst for the AUD/USD pair will be the upcoming Australian jobs numbers. Economists expect the data to show that the unemployment rate remained at 4.1% in May and the participation rate remained at 67.1%.
They also expect the data to reveal that the Australian economy created 25,000 in May, down by 89,000 a month earlier. These numbers will provide more information about what to expect in the next Reserve Bank of Australia (RBA) meeting.
AUD/USD technical analysis
The daily chart shows that the AUD/USD exchange rate has remained unchanged in the past few days. It has retreated from a high of 0.6545 last week to 0.6470.
The pair has moved slightly above the 61.8% Fibonacci Retracement level at 0.6432. It has remained above the 50-day and 100-day Exponential Moving Averages (EMA).
The pair has formed an ascending channel shown in blue. Also, the Relative Strength Index (RSI) has pointed downwards and is nearing the neutral point at 50.
Therefore, the AUD/USD pair will remain in this range ahead of the Fed decision and Australian jobs data. The key levels to watch will be at 0.6350 and 0.6600.
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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.