AUD/USD Forex Signal: Persistent Downtrend


Bearish view

  • Sell ​​AUD/USD and set take-profit at 0.6650.
  • Add a stop-loss at 0.6875.
  • Lead time: 1-2 days.

Bullish view

  • Set a buy-stop at 0.6812 and a take-profit at 0.6900.
  • Add a stop-loss at 0.6750.

The downtrend in AUD/USD ended at significant support after the FOMC hawkish minutes and falling commodity prices. It is trading at 0.6800, which is significantly lower than where it started the year.


Divergence between the US dollar and commodities

The Reserve Bank of Australia concluded its meeting on Tuesday and announced a rate hike of 0.50%. As a result, the Aussie retreated as the rise was already priced in by market participants.

Notably, the bank said it would likely continue to raise interest rates, but warned that would depend on the data. The RBA, like other major central banks, is trying to bring inflation back to its 2% target.

AUD/USD fell on the hawkish minutes from the Federal Reserve. The minutes showed that members were still convinced that higher rates were needed to fight inflation. Members are still torn between a rate hike of 0.75% and 0.50%.

Still, there are some positive signs that inflation is about to start falling in the coming months. For example, the price of crude oil has fallen from a year-to-date high of $135 to below $100. Similarly, the price of natural gas has also fallen even as the crisis in Ukraine worsens.

Other commodities are moving towards a bear market. Copper and iron ore hit its lowest point in more than a year. Therefore, it is possible that these prices are passed on to consumers.

The main catalyst for AUD/USD will be the upcoming private sector payroll by ADP. Analysts expect data to show the sector added 200,000 jobs in June even as the cost of doing business rose. These figures will provide a preview of the official jobs numbers expected for Friday. The United States will also release the latest export and import data.

AUD/USD Forecast

The three-hour chart shows that the AUD/USD pair formed a descending triangle in June. It then moved below this pattern on Friday last week. In price action analysis, this pattern is usually a sign of a bearish continuation.

The pair then formed a breakout and retest pattern as it moved to the lower side of the triangle. It broke below the 25-day moving averages while the MACD broke below the neutral point. Therefore, the outlook is still bearish, with the next target to watch being at 0.6650, which sits along the second level of support.



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