The pair will likely continue rising as bulls target the next key resistance level at 0.7100.
- Buy the AUD/USD and set a take-profit at 0.7100.
- Add a stop-loss at 0.6900.
- Timeline: 1-2 days.
- Set a sell-stop at 0.6930 and a take-profit at 0.6850.
- Add a stop-loss at 0.7025.
The AUD/USD price rose to the highest level since June 2022 as the US dollar decline continued. The Australian dollar is trading at 0.6956, which is significantly higher than this month’s low of 0.6685.
Focus on the US Dollar
The AUD/USD pair continued rising as the US dollar continued falling ahead of this week’s Federal Reserve interest rate decision. After soaring to a two-decade high of $109.30 this month, the US dollar index declined to about $106.
The decline of the US dollar happened as market volatility declined. The closely watched CBOE volatility index declined to the lowest level in more than a month while the fear and greed index rose to above 35.
The main catalyst for the AUD/USD pair will be the latest interest rate decision by the Federal Reserve that is scheduled for Wednesday this week. Analysts expect that the bank will hike interest rates by another 0.75% in this meeting. The committee will also hint that it will hike interest rates several times this year as it continues battling the soaring inflation.
On Tuesday, the main driver for the AUD/USD pair will be the latest US consumer confidence data. Economists expect that the country’s confidence declined to 97.2 in July as concerns about inflation remained. Consumer confidence is an important data because it signals trends in consumer spending in the country.
The others notable data will be on housing. The US will release the latest new home sales data. Analysts expect that sales of new home sales declined from 696k in May to 660k as the housing sector continued weakening. Last week, data showed that existing home sales and building permits declined in June as mortgage rates soared.
Meanwhile, in Australia, data by CoreLogic revealed that house prices in Sydney declined by 1.9% in the past four weeks, the fastest decline in more than 40 years. The same trend happened in Melbourne, where prices dropped by 1.2%.
The AUD/USD pair rose to a high of 0.6960 as the USD decline continued. On the four-hour chart, the pair moved to the 50% Fibonacci retracement level. It also rose above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved below the overbought level.
Therefore, the pair will likely continue rising as bulls target the next key resistance level at 0.7100. A drop below the support at 0.6900 will invalidate the bullish view.
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