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MENAFN- Daily Forex) Bullish view
Buy the AUD/USD pair and set a take-profit at 0.6700 Add a stop-loss at 0.6500 Timeline: 1-2 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.6500 Add a take-profit at 0.6700.
The AUD/USD exchange rate continued its recovery as market participants waited for the upcoming US consumer inflation and jobs data. It rose to a high of 0.6600, much higher than last month's low of 6413 Jobs and Inflation Data
The AUD/USD exchange rate rose as investors reacted to last Friday's non-farm payrolls (NFP) data, which showed that the economy created much fewer jobs than expected in August. It added just 22,000 jobs, lower than the median estimate of 75,000.
The next important report to watch will be the revision of the US jobs numbers created in the 12 months to March this year. Analysts expect that the revision by the Bureau of Labor Statistics will show that the economy created 800,000 fewer jobs than previously reported. Some analysts see that number coming closer to 1 million.
A big revision will confirm that the labor market is less robust than previously expected, a move that will put pressure on the Federal Reserve to start cutting interest rates next week.
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The main risk is that the US could be in a stagflation, a period characterized by higher inflation and slow economic growth. Data expected on Wednesday is expected to show that the headline Producer Price Index (PPI) remained at 3.3%, while the core PPI, which excludes the volatile items, eased from 3.7% to 3.5%.
The other crucial catalyst for the AUD/USD exchange rate will be Thursday's Consumer Price Index (CPI)rose from 2.7% in July to 2.9% in August, while the core CPI rose from 3.1% to 3.2%.
As such, while the Fed interest rate cuts may help to supercharge the economy, chances are that they may push inflation higher in the longer term.
EURUSD Chart by TradingViewAUD/USD Technical Analysis
The daily chart shows that the AUD/USD exchange rate has rebounded in the past few days, moving from a low of 0.6413 to the current 0.6600. It has moved above the important resistance level at 0.6565, the neckline of the double-bottom pattern at 0.6413.
The pair has remained above the 50-day moving average and the Ichimoku cloud. Also, the Relative Strength Index (RSI) and the MACD indicators continued rising.
The pair is now approaching the important resistance level at 0.6623, the highest swing this year. Therefore, the pair will likely retest that level and possibly rise to the resistance point at 0.6700.
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