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MENAFN- Daily Forex) Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6400. Add a stop-loss at 0.6600. Timeline: 1-2 days.
Bullish view
Buy the AUD/USD pair and set a take-profit at 0.6600. Add a stop-loss at 0.6400.
The AUD/USD pair rose after the latest Australian and US inflation data. It also rose as the US dollar
index retreated ahead of the Thanksgiving holiday. It was trading at 0.6500, higher than the lowest level this month and Australia inflation data
Economic data released on Wednesday showed that inflation was still a concern in the United States and Australia.
A report by the Australia Bureau of Statistics (ABS) showed that the Consumer Price Index (CPI) stood at 2.1% in October. The core CPI, which is the RBA's favourite inflation gauge, remained at 3% during the month.
That data reinforced Governor Michele Bullock's view that inflation was still a concern, which explains why she is yet to cut interest rates. Analysts expect that the bank will start cutting either in the first or second quarter of next year.
The AUD/USD pair also reacted to a report that showed the US personal consumption expenditure (PCE), the Fed's favorite inflation data, remained above 2% in October. The PCE and core PCE rose 2.3% and 2.8% in October.
Therefore, the Fed will likely maintain interest rates steady in the upcoming meeting in December. Minutes released on Tuesday showed that officials expressed concerns about cutting so fast and its impact on inflation.
The AUD/USD pair also reacted to the ongoing fears about trade as Donald Trump prepares to become president. Earlier this week, he announced plans to levy large tariffs on Chinese, Mexican, and Canadian goods.
Analysts expect that other countries that do a lot of business with the US may become victims of these tariffs/USD Technical Analysis
EURUSD Chart by TradingView
The AUD/USD pair has been in a strong downtrend in the past few months. It has dropped below the 50-day moving average and the 61.8% Fibonacci Retracement level. The pair has also formed a bearish flag chart pattern, a popular bearish sign,
The Relative Strength Index (RSI) has dropped below the neutral point at 50. Also, it is stuck at the strong, pivot, reverse level of the Murrey Math Lines at 0.6470. Therefore, the pair will likely continue falling as sellers target the key support at 0.6400, which is an important psychological level. The invaldation of this pattern will be at 0.6535.
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