Symmetrical triangular points to drop


The pair will likely have a bearish breakout in the next few days.

Bearish view

  • Sell ​​the AUD/USD pair and set a take-profit at 0.6850.
  • Add a stop-loss at 0.700.
  • Lead time: 1-2 days.

Bullish view

  • Set a buy-stop at 0.6954 and a take-profit at 0.7050.
  • Add a stop-loss at 0.6890.

AUD/USD moved sideways as investors reflected on Jerome Powell’s latest statement and US housing data. The pair also consolidated as Australian and US bond yields rose sharply. It is trading at 0.6923, where it has been for the past few days.


Liquidation of US and Australian bonds

The AUD/USD pair has entered a consolidation phase as investors focus on the ongoing bond selloff. In Australia, 10-year government bond yields rose to 3.84%. Similarly, in the United States, the ten-year yield rose to 3.21% while the 30-year yield rose to 3.32%.

The surge in bond yields reflects the fact that the Reserve Bank of Australia (RBA) and the Federal Reserve have recently adopted a more hawkish tone. Earlier this month, the RBA decided to raise interest rates by 0.50% in its fight against inflation.

Similarly, the Federal Reserve decided to raise interest rates by 0.75%, the largest increase in nearly three decades. In testimony to Congress last week, the Fed Chairman said these rate hikes were necessary in his fight against inflation.

There will be no economic data from Australia on Tuesday. Therefore, investors will focus on upcoming US consumer confidence data from the Conference Board. The data comes at a time when Americans are paying $5 a gallon for gas while mortgage rates have jumped to more than 6%.

Consequently, analysts expect the country’s consumer confidence to drop from 106 to 100 in June. This is important data since consumers are the most important part of the US economy. Thus, if consumer spending declines, the risks of recession are higher.

Data released by JP Morgan on Monday showed that U.S. small business confidence fell to a multi-year low. These companies are concerned about the rising cost of doing business.

AUD/USD Forecast

The four-hour chart shows that the AUD/USD pair has been moving sideways over the past few days. It trades between the 25 and 50 period moving averages. Additionally, the pair formed a symmetrical triangular pattern which is depicted in black. It is also slightly above the key support level at 0.6850, which was the lowest level on June 14 and May 12. The pair is also along the standard pivot point.

Therefore, the pair will likely have a bearish breakout in the next few days. If that happens, the next level to watch will be at 0.6850.



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