Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6500.
- Add a stop-loss at 0.6350.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6300.
- Add a stop-loss at 0.6500.
The AUD/USD exchange rate has been in a strong upside this month as the market comes to terms with Donald Trump’s policies. The pair rose and crossed the important resistance level 0.6400 for the first time in months. It has jumped by almost 10% from its lowest level this month.
US dollar sell-off continues
The Australian dollar has surged this month after Trump’s policies sent shockwaves in the US and other countries. He embarked on a full-scale trade war by imposing tariffs on all countries.
Most Australian goods to the US are now being charged a 10% tariff, a move that is impacting goods worth billions of dollars. Most importantly, China, the biggest buyer of US goods, has received a 145% tariff.
The AUD/USD pair has also jumped as US stocks have continued falling. Top indices like the Dow Jones and Nasdaq 100 have moved into a correction and lagging behind their global counterparts, including the ASX 200.
Investors have also continued selling US bonds and moving funds to other assets like gold and foreign bonds.
In addition to tariffs, investors are concerned about the Federal Reseve’s independence as Trump ramps up pressure to cut rates. He has cited recent data that revealed that inflation dropped in March before his Liberation Day tariffs came into effect. Most economists believe that inflation will bounce back as companies adjust their prices.
The fear is that Trump may attempt to fire the Fed Chair. However, most legal analysts believe that such a move would be stopped by the Supreme Court.
Looking ahead, there will be no major economic data from the United States and Australia on Tuesday. Therefore, the AUD/USD pair will react to a few statements from a few Fed officials like Raphael Bostic and Philip Jefferson.
AUD/USD technical analysis
The daily chart shows that the AUD/USD pair has been in a strong bull run in the past few weeks. It has jumped above the 50-day and 100-day moving averages.
The pair has moved to the 50% Fibonacci Retracement level, while the Percentage Price Oscillator has continued rising. Most notably, the pair moved above the psychological point at 0.6400 for the first time since February.
Therefore, the pair will likely continue rising as buyers target the 61.8% retracement level at 0.6550, up by 2% above the current level.
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