The AUD/USD currency pair made a rebound on Friday following the 10-day decline which saw the pair drop to trade at new 3-month lows of about 0.6988. The pair dropped slightly to beat last month’s lows taking it to levels last witnessed at the start of the year.
However, the Aussie has since recovered significantly to trade above 0.7030 and now seems headed for the 0.7100 key level. However, the bulls will be looking for a short-term halt at around 0.7050/60 before the final stretch to 0.7100.
AUD/USD Fundamentals Overview
From a fundamental perspective, the AUD/USD pair has been lacking enough catalysts to push it upwards given the weakness in the fundamentals that drive the Aussie. And over the last few days, this has been evident following yet another disappointing data from the Reserve Bank of Australia (RBA) which showed that inflation for Q1 missed expectations.
This triggered fears that the RBA could be prompted to cut rates thereby triggering a major pullback in the pair. A report from Australia’s Bureau of Statistics showed that local CPI was 0.0% in Q1 versus a forecast of 0.5%.
But after the US GDP data for Q1 also sent mixed signals, now the Aussie appears ready to bounce back and push the pair towards 0.7100.
AUD/USD Technical Analysis (the 240-min Chart)
Technically, the pair appears to be making a short-term rebound before another pullback that could take it towards January lows. As such, while the bulls set up to profit from the current rebound, the bears will continue to maintain control in the intermediate future.
As such, the bulls will target profits at around 0.7100 level while the bears will look to pounce on the next pullback by targeting profits at around 0.7000 or down below at 0.6988.
AUD/USD Technical Analysis (the Daily Chart)
In the daily chart, the AUD/USD currency pair appears to be forming what could eventually become a sideways channel rangebound between 0.7000 and 0.7200.
However, when you look further back, the channel is forming off a descending trend, which means that a bearish breakout could occur thereafter. This creates more opportunities for both the bulls and the bears especially given the formation of what appears to be a double-top candlestick pattern.
In summary, the AUD/USD currency pair has made a short-term rebound following Friday’s mixed US economic data. However, the general outlook remains bearish with the Aussie susceptible to a potential rate cut given RBA’s tepid inflation update.