(MENAFN- Daily Forex) Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6600. Add a stop-loss at 0.6760. Timeline: 1-2 days.
Bullish view
Set a buy-stop at 0.6665 and a take-profit at 0.6750. Add a stop-loss at 0.6600.
The Australian dollar's sell-off gained steam in the overnight session, falling to its lowest point since September 11. The AUD/USD pair plunged to a low of 0.6655, substantially lower than the year-to-date high of 0.6942.
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The AUD/USD pair slumped mostly because of the strength of the US dollar. The dollar index soared to the important resistance point at $104, its highest level since August 2nd. It has jumped sharply after bottoming at $100.18 in September.
The US dollar's jump happened as government bond yields continued their recovery after the strong economic data from the country.
A report released last week showed that the headline and core retail sales held relatively steady in September. These numbers mean that the economy was doing well since consumer spending is the biggest part of the economy.
Data released before that showed that the labor market remained relatively strong in September, while inflation was above the 2% target level.
Therefore, US bond yields have risen as investors anticipate that the Fed will be cautious when cutting interest rates. The 10-year Treasury bond yield crossed the important resistance point at 4.14%, its highest point last week, and reached a high of 4.18%, its highest level since July 29. Similarly, the five-year government yield rose to 3.97%, while the two-year rose to 4.025%.
The same trend has happened in Australia, where the central bank is considering whether to cut interest rates. Data shows that the ten-year yield rose to 4.36%, its highest level since July 11. Also, the five-year yield rose to 3.96%.
There will be no economic data from Australia and the United States on Tuesday, meaning that the AUD/USD exchange pair downtrend may continue/USD technical analysis
The AUD/USD pair has been in strong downward trend after peaking at 0.6942 late last month. It recently dropped below the crucial support level at 0.6800, its highest swing on June 11.
EURUSD Chart by TradingView
The 50-day and 25-day Weighted Moving Averages (WMA) have formed a bearish crossover, pointing to more downside. Oscillators like the Stochastic Oscillator and the MACD indicators have continued falling.
Therefore, the pair will likely continue falling as the US dollar strength continues its uptrend. This retreat will see it drop to the next psychological point at 0.6600.
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