The AUD/USD price rose after Jerome Powell confirmed what most analysts were expecting.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6900.
- Add a stop-loss at 0.6700.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6750 and a take-profit at 0.6650.
- Add a stop-loss at 0.6850.
The AUD/USD price rose during the American and Australian sessions after the dovish Jerome Powell statement. It also reacted to the latest Australian inflation data and weak Chinese manufacturing and services numbers. The pair rose to 0.6780, the highest level since September 13.
Fed pivot and Australia inflation peak
The AUD/USD price held steady after Australia published the closely watched inflation data. According to the statistics agency, headline inflation dropped from 7.3% in September to 6.9% in October. That decline was bigger than the median estimate of 7.4%.
These numbers show that the country’s inflation has peaked, which will incentivize the central bank to stick its course on smaller rate hikes. Economists expect that the Reserve Bank of Australia (RBA) will deliver its third straight 0.25% hike on Tuesday.
Other numbers revealed that Australia’s economy was under pressure. Private house approvals dropped by 2.2% while business confidence plunged to -57.1 in November. Therefore, there is a possibility that the RBA will pause its hikes in Q1 of next year.
The AUD/USD price rose after Jerome Powell confirmed what most analysts were expecting. In a speech, he said that the bank will start lowering the size of rate hikes in its December meeting. This confirmed what last week’s minutes said. As such, analysts expect that the Fed will hike interest rate by 0.50% in December.
The next important data will be the upcoming Personal Consumption Expenditures (PCE) data. PCE is the Fed’s favorite inflation gauge. Economists expect the data to show that the headline PCE dropped to 6.0% while core PCE retrated to 5.0%.
These numbers will come a day ahead of the important nonfarm payrolls data. Still, these numbers will likely not have an impact on the upcoming actions by the Federal Reserve.
AUD/USD forecast
The AUD/USD pair has been in a tight range in the past few days. In this period, it has struggled moving above the important resistance level at 0.6783. It had formed a double-top pattern, which is usually a bearish sign.
The pair invalidated the double-top when it moved above the level during the overnight session. It has moved above the 50-day moving average while Bollinger Bands have widened. The Stochastic Oscillator has moved above the overbought level.
Therefore, the pair will remain in a bullish trend as long as it is above the support at 0.6783 and the 50-day EMA. The key level to watch will be 0.6900.
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