The AUDUSD currency pair is in a wide correction on the H4 timeframe.
Today the attention of market participants is focused on the U.S. consumer price index (CPI) data for April. The decline in the indicator may have a positive impact on the U.S. dollar, as inflation is above the regulator's target of 2% per annum.
According to forecasts, the annual figure of consumer price index in the U.S. will remain unchanged at the level of 5%. Meanwhile, core inflation, which excludes volatility in the food and energy sectors, will fall to 5.5%. Overall and core CPI should show monthly growth by 0.4%. The news release is at 3:30 p.m. Moscow time.
If U.S. inflation is higher than expected, it could force the Fed to review its strategy of stopping the cycle of monetary policy tightening. This event will be bad for the U.S. dollar in the short term.
Tomorrow morning at 04:00 Moscow time, expectations for consumer price inflation in Australia will be published. According to forecasts, the figure should rise to 5% from the previous value of 4.6%, which is a negative factor for the Australian dollar. The Reserve Bank of Australia's inflation target is at 2% per annum. High inflation forces the regulator to tighten monetary policy.
Monetary policy in Australia and the U.S. are in a phase of tightening. In this background, the AUDUSD currency pair formed a wide corrective corridor with a range of 0.6570 - 0.6805. At the beginning of the week the price rolled back from resistance at 0.6805 signaling a move to the opposite boundary at 0.6570.
On the M30 timeframe the price went out of the rising trend, indicating the beginning of the new downtrend formation. In terms of wave analysis, the price of the pair is in the formation of the third descending wave. Breakout of the first wave top at 0.6745 will strengthen the movement to selling.
The Relative Strength Index indicator (standard values) demonstrates the presence of convergence, which confirms the formation of a downward trend.
Signal:
Short-term prospects for the AUDUSD pair are to sell.
The target is at the level of 0.6685.
Part of the profit should be fixed near the level of 0.6740.
The stop-loss is at the level of 0.6810.
"Bearish" trend has a short-term character, so the volume of trade should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
