Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6500.
- Add a stop-loss at 0.6300.
- 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 pair declined slightly after reaching the crucial resistance level at 0.6435 last week. It dropped to the crucial support at 0.6400, which is about 8% above the lowest level this month.
Australian inflation data ahead
The AUD/USD exchange rate remained in a consolidation phase in the past few days as investors focused on Donald Trump’s change of mind. Trump changed his mind on firing Jerome Powell, the Fed Chair as some officials had hinted.
There are also indications that the US is negotiating a trade deal with China. Scott Bessent, the Treasury Secretary, recently said that the current tariffs were unsustainable and that the two countries would reach a deal.
Another report by the Wall Street Journal (WSJ) showed that Trump was considering tariffs on China to about 50%. This means that the other two countries will ultimately drop most of their tariffs soon, a move that would benefit Australia.
The AUD/USD pair will have several key catalysts this week. Australia will publish the latest inflation data on Wednesday. Economists expect the report to show that the headline consumer inflation fell from 2.4% in Q4 of last year to 2.2% in the first quarter. However, the QoQ inflation figure is expected to be 0.7%, higher than the previous 0.2%.
The closely watched trimmed mean inflation is expected to drop from 3.2% to 2.8%, while the weighted mean has moved from 3.4% to 3.2%. A sign that the country’s inflation is falling will increase the likelihood that the Reserve Bank of Australia (RBA) will continue to cut rates in the next few months.
The AUD/USD pair will also react to the upcoming US consumer confidence and nonfarm payrolls (NFP) data.
AUD/USD technical analysis
The daily chart indicates that the AUD/USD exchange rate has rebounded over the past few weeks. It rose from a low of 0.5912 to a high of 0.6400.
The pair has found resistance at the 50% Fibonacci Retracement at 0.6430. It has moved above the 50-day and 100-day moving averages. The MACD indicator has moved above the zero line.
The pair will likely continue rising as bulls target the key resistance at 0.6550. A drop below the support at the 50-day moving average will invalidate the bullish outlook.
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