(MENAFN- Daily Forex) Bullish View
Buy the AUD/USD pair and set a take-profit at 0.6600. Add a stop-loss at 0.6442. Timeline: 1-2 days.
Bearish View
Sell the AUD/USD pair and set a take-profit at 0.6440. Add a stop-loss at 0.6610.
The AUD/USD
exchange rate rose for three consecutive days as the recent US dollar
index surge took a breather. The pair rose from last week's low of 0.6440 to a high of 0.6525, its highest level since November 14.
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Forex Brokers1 Get Started 74% of retail CFD accounts lose money RBA Minutes and US Dollar Index Weakness
The AUD/USD pair rallied as the US dollar index dropped from last week's high of $107.07 to $106.17 as concerns about Donald Trump eased.
Trump has made several pledges, including deportations and tariffs that could be highly inflationary. Deporting millions of undocumented migrants would lead to labor shortages in key areas like hospitality and agriculture, a move that would push prices higher.
However, analysts believe that Trump will not be able to implement all those deportations because of the limited resources. Also, courts will likely intervene as they did in his first administration.
Additionally, some analysts believe that the threat of higher tariffs will not work out well since the US still needs to trade with those countries.
The AUD/USD pair rose after the Reserve Bank of Australia (RBA) published minutes of the last meeting. Those minutes provided little hints on when the bank will start to cut interest rates.
However, what was clear was that the bank will not cut rates in its December meeting since officials want a couple of good quarterly inflation reports first. Still, the bond market is signaling that a rate cut in the first quarter will be likely. The ten-year yield has dropped in the last four consecutive days, moving from 4.7% to 4.5%.
Looking ahead, there will be no important data from the US and Australia on Wednesday. The likely catalysts to watch will be statements by Fed officials like Lisa Cook and Michele Bowman/USD Technical Analysis
The AUD/USD exchange rate has been in a strong recovery this week, rising from a low of 0.6442 to 0.6525. This recovery happened after it formed a bullish harami candlestick pattern, where a big bearish candle is followed by a small bullish one.
EURUSD Chart by TradingView
The pair is now attempting to form a three white soldiers pattern, which is often a bullish sign. This recovery is supported by oscillators as the Relative Strength Index (RSI) has pointed upwards.
The AUD/USD pair remains below the 25-day Exponential Moving Average (EMA) at 0.6587. Therefore, there is a likelihood that the recovery will continue as bulls target that resistance point. A drop below last week's low at 0.6442 will invalidate the bullish view.
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