Fall ahead of Fed and Aussie data
The pair will likely continue to move lower as bears target the next key support at 0.7650.
- Sell the AUD / USD and establish a profit taking at 0.7650.
- Add a stop-loss at 0.7600.
- Lead time: 1-2 days.
- Set a buy stop at 0.7720 and a take profit at 0.7770.
- Add a stop-loss at 0.7680.
AUD / USD remained in a narrow range on Monday as Australian markets remained closed for the Queen’s birthday. The pair is trading at 0.7700, about 1% below Friday’s high.
Australia under pressure
AUD / USD fell sharply on Friday as traders began to reposition themselves for the Federal Reserve meeting. Analysts believe the Fed will remain accommodating and leave interest rates and quantitative policies unchanged.
The meeting will come a week after the Reserve Bank of Australia (RBA) also left its pandemic response tools unchanged. The bank will publish the minutes of this meeting on Tuesday. These minutes will show the thinking behind the bank’s decision.
The minutes will come at the same time as the country releases the latest House Price Index (HPI). Analysts estimate that the HPI fell from 3% in the fourth quarter to 5.5% in the first quarter. Recently, the country’s real estate market has become expensive, thanks to ultra-low interest rates.
Later this week, the AUD / USD will react to a data dump by China’s statistics agency. The bureau will release the latest data on retail sales, capital investment and the unemployment rate on Wednesday. These numbers are important for the Australian dollar as it is often seen as a proxy for the Chinese economy. This is due to the large volume of goods that China buys from the country.
Other notable events that will move the AUD / USD will be the latest US housing starts and building permits data and US retail sales figures.
More importantly, the Australian Bureau of Statistics (ABS) will release the latest employment figures on Thursday. Analysts expect these figures to show that the economy has created more than 30,000 jobs while the unemployment rate has remained unchanged at 5.5%.
AUD / USD technical analysis
The four hour chart shows that the EUR / USD pair has been under pressure lately. As a result, it formed a descending channel which is shown in blue and moved below the 25 and 15 day moving averages. It also fell below the 50% Fibonacci retracement level. It also appears to form a head and shoulders pattern. Therefore, the pair will likely continue to move lower as bears target the next key support at 0.7650. However, a move above 0.7730 will invalidate this prediction.