(MENAFN- Daily Forex) Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7000. Add a stop-loss at 0.6800. Timeline: 1-2 days.
Bearish view
Set a sell-stop at 0.6880 and a take-profit at 0.6800. Add a stop-loss at 0.7000.
The Australian dollar pulled back on Thursday, continuing a trend that has been going on after it peaked at 0.6942. This retreat happened as the
market embraced a risk-off sentiment as geopolitical issues rose.
The main geopolitical crisis is in the Middle East, where Israel launched a land invasion of Lebanon as its fight with Hezbollah continued. Israel was then attacked by Iran, which launched hundreds of missiles towards Tel Aviv.
In a statement, Benjamin Netanyahu, the prime minister, vowed to retaliate, a move that may spark a broader war in the region. Some analysts expect that Israel will strike Iran's oil terminals to reduce its foreign exchange.
While Iran is still under sanctions, it is one of the biggest oil exporters globally, selling over 1.3 million barrels each day. Cutting it from the global market may lead to more oil price increase, which will lead to higher inflation.
Major oil benchmarks have risen in the past few days, with Brent and West Texas Intermediate (WTI) rising to $74.75 and $71, respectively.
The AUD/USD pair also dropped after the US published better-than-expected jobs numbers. Job vacancies rose to over 8 million in August while a report by ADP revealed that the private sector created over 143k jobs in September.
The next data to watch will be the US services PMI numbers, which will provide more information about the economy. Analysts expect the data to show that the services sector continued doing well in September.
While the PMI report is important, its impact on the US dollar will be limited since traders will be focusing on the upcoming nonfarm payroll (NFP) report on Friday.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money AUD/USD Technical Analysis
The AUD/USD exchange rate retreated from the year-to-date high of 0.6942 to 0.6885. It has retested the important support at 0.6871, its highest swing in December last year. A break and retest pattern is often a sign of bullish continuation.
The pair has remained above the 50-day and 25-day Exponential Moving Averages (EMA), meaning that bulls are still in control. Also, the MACD and the Relative Strength Index (RSI) have continued rising.
Therefore, the pair will likely bounce back ahead of the US jobs numbers on Friday. If this happens, the next point to watch will be last week's high of 0.6942. A break above that level will point to more gains.
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