Over the past couple of weeks, AUDUSD has clawed its way higher, catching a bid from a softening dollar after US jobs data came in on the weak side. But let's not get ahead of ourselves—the market is still laser-focused on where interest rates are headed on both sides of the pond, as this is the real needle-mover for the pair's long-term trajectory.
For AUDUSD, the name of the game is Federal Reserve (Fed) monetary expectations. Recent numbers suggest the American economy is starting to lose its steam—hiring is slowing, and business activity isn't as resilient as it once was. This has breathed new life into speculation that the regulator might skip further tightening and pivot toward a softer stance before long. Across the Pacific, however, the Aussie is enjoying a tailwind from the Reserve Bank of Australia's (RBA) relatively high interest rate, with inflation still hovering uncomfortably above the target. Even if activity softens a bit, prices won't cooperate, so the monetary authority is being cautious and in no hurry to turn dovish.
All things considered, the fundamental picture for the pair is looking bullish at the moment. The charts back that up—all signs point to a move higher, with 0.71000 firmly in the crosshairs.
The final recommendation:
— Buy the AUDUSD pair at the current price (0.69400), targeting 0.71000 within one month.
— To guard against a reversal, place a Stop Loss order just below the support level, namely at 0.68700.
This content is for informational purposes only and is not intended to be investing advice.
