The American currency strengthened yesterday on the release of the U.S. construction sector data. According to the Commerce Department, last month, single-family homebuilding rose by 21.7% to 1.631 million units year-over-year. The number of permits issued for future constructions also increased. This suggests that there may be a change in the housing market after the U.S. Federal Reserve (Fed) raised rates.
The AUDUSD currency pair is becoming more bearish. Traders are avoiding long positions ahead of Fed Chairman Jerome Powell's speech in Congress.
Powell will present his semi-annual report on monetary policy to the U.S. House of Representatives Committee on Financial Affairs at 14:00 GMT. Market participants will closely monitor the central bank's position on further interest rate hikes in light of tough statements from board members.
On Tuesday, two Fed officials said that the focus remains on reducing inflation that is too high.
According to the CME FedWatch tool, traders now estimate the probability of rate hikes by the regulator in July at 78%.
The other part of the planet is also struggling with high consumer prices.
Australia's unemployment rate has to rise to help curb inflation and avoid higher interest rates as well as a deep recession. Reserve Bank of Australia Deputy Governor Michele Bullock warned about this on Tuesday.
In her words, the unemployment rate needs to rise to about 4.5% in order to restore balance to the economy. This is much lower than before the pandemic.
AUDUSD broke out of the uptrend on the H4 timeframe.
In terms of wave analysis, the price is in the formation of the second ascending wave on the hourly timeframe. The Stochastic Oscillator sliding indicators (standard values) have moved out of the overbought zone, suggesting the completion of the formation of the last wave and departure to the third wave.
Signal:
The short-term outlook for the AUDUSD currency pair suggests selling.
The target is at the level of 0.6695.
Part of the profit should be taken near 0.6735.
The Stop-loss is set at 0.6845.
Bearish trend has a short-term character, so the trade volume should not be more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
