(MENAFN- Daily Forex) Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6750. Add a stop-loss at 0.6900. Timeline: 1-2 days.
Bullish view
Set a buy-stop at 0.6845 and a take-profit at 0.6915. Add a stop-loss at 0.6750.
The Australian dollar pulled back sharply after the monthly inflation indicator retreated to its lowest point in three years. The AUD/USD pair dropped to a low of 0.6820, down from this week's high of 6905 inflation eases
The AUD/USD pair retreated after the Australia Bureau of Statistics (ABS) published the monthly inflation indicator. The CPI retreated to 2.7% in August from the previous month's 3.5%.
It was the lowest figure in over three years and a sign that the central bank is achieving its inflation target.
The data came a day after the Reserve Bank of Australia (RBA) delivered its interest rate decision. In it, the bank left interest rates unchanged at 4.35% and expressed concerns that prices were still stubbornly high.
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Unlike in the past meetings, the bank did not discuss hiking interest rates as it has done before. As such, if inflation continues falling, there are signs that it will start cutting rates either later this year or in early 2025.
Some analysts expect the bank to start cutting rates as soon as in its November meeting. This will depend on the full third quarter consumer inflation numbers. In that report, traders will focus on the closely-watched trimmed mean inflation data.
The pair also retreated after the mixed housing numbers from the United States. New home sales retreated by 4.7% to 716k, higher than the median estimate of 699k. On the other hand, building permits came in at 1.47 million in August, missing the estimated 1.475 million.
The AUD/USD pair will react mildly to the final reading of US GDP data. Economists expect the data to show that the economy expanded by 3% in Q2, higher than the previous 1.4%. The US will also release last week's initial and continuing jobless claims numbers/USD technical analysis
The AUD/USD exchange rate peaked at 0.6906 on Wednesday and then retreated sharply after the encouraging Australia inflation data. It dropped below the important support level at 0.6871, its highest swing on December 28.
The pair has also formed a bearish engulfing candlestick pattern, a popular reversal sign. This pattern is characterized by a big bearish candle that surrounds a bullish candle fully. In most cases, it usually leads to more downside. Therefore, it will likelyretreat to the next psychological point at 0.6750.
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