(MENAFN- Daily Forex) Bullish view
Buy the AUD/USD pair and set a take-profit at 0.6400. Add a stop-loss at 0.6200. Timeline: 1-2 days.
Bearish view
Set a sell-stop at 0.6265 and a take-profit at 0.6200. Add a stop-loss at 0.6400.
The AUD/USD
exchange rate pulled back after the relatively weak Chinese economic data. It also retreated to 0.6277 ahead of the upcoming US and Australian economic data and the
federal Reserve interest rate decision.
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The AUD/USD pair will be highly volatile ahead of the upcoming US and Australian economic data. The Conference Board will release the January consumer confidence report. Economists expect the data to show that the headline consumer confidence rose from 104.7 in December to 105.9 in January.
Another US report to watch this week will be the upcoming durable goods orders data, which provide more color about the state of the economy.
These numbers will come on the same day the Federal Reserve starts its two-day monetary policy meeting. Economists expect the bank to leave interest rates unchanged as officials guided during the December meeting. In it, officials left rates unchanged, with the dot plot pointing to two cuts this year.
The AUD/USD pair reacted to the weak Chinese macro data. According to the statistics agency, the composite PMI dropped from 52.2 in December to 50.1 in January, lower than the median estimate of 52.1. The manufacturing PMI figure fell from 50.1 to 49.1, lower than the expected 50.1.
China's ecomomic numbers are important for Australia because of the volume of trade between the two countries. Australia sells most of its goods like coal and iron ore to China, meaning that it does well when the economy is thriving.
The most important AUD/USD data this week will be Australia's inflation data, which will help to determine whether the RBA will cut or hold rates. Economists expect the data to reveal that the headline CPI dropped from 2.8% in Q3 to 2.5% in Q3. They expect the closely watched trimmed and weighted mean CPI figures to drop to 3.3% and 3.5%.
EURUSD Chart by TradingViewAUD/USD technical analysis
The AUD/USD exchange rate retreated to a low of 0.6280, a few points below last Friday's high of 0.6330. It pulled back after hitting the 50-day Exponential Moving Average (EMA).
The retreat happened as it neared the important resistance point at 0.6350, its lowest swing on August 5.
It has formed a small inverse head-and-shoulders chart pattern, a popular reversal sign. Therefore, the pair will likely resume the uptrend as bulls target the key resistance level at 0.6350. A break above that level will point to further gains to 0.6400.
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