Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6600.
- Add a stop-loss at 0.6400.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6400.
- Add a stop-loss at 0.6600.
The AUD/USD exchange rate continued to consolidate after the recent important macro data from the United States and Australia. It rose slightly to the psychological point at 0.6500, up slightly from its lowest point this week. Ir has jumped by almost 10% from its lowest point this year.
US and Australia macro data
The AUD/USD pair wavered after a report showed that Australia’s services and composite PMIs dropped slightly in May. The services PMI fell from 51 in April to 50.5 in May, while the composite figure moved from 51 to 50.5.
While a drop is negative, the fact that they remained above 50 is a sign that the Australian economy is doing well.
Another report showed that Australia’s economy grew by 0.2% in the first quarter, a slowdown from th fourth quarter. This growth translated to an annual figure of 1.3%, matching its growth in the previous quarter.
These numbers mean that the Reserve Bank of Australia (RBA) will likely decide to slash interest rates in the next meeting. It has already slashed rates twice this year, and the trend may continue in the next few meetings.
The AUD/USD pair also reacted to macro data from the United States, which confirmed that the economy was slowing. A report by ADP showed that the private sector created 37k jobs in May after adding 60k in the previous month. The figure was much lower than the expected addition of 115k.
Another reading showed that the US services PMI also softened during the month. It dropped from 51.6 in April to 49.9 in May this year. These numbers mean that business output has slowed since Donald Trump implemented his so-called reciprocal tariffs on other countries.
AUD/USD technical analysis
The AUD/USD pair largely ignored the economic numbers released on Wednesday as it remained in a tight range. It was trading at 0.6500 on Thursday, higher than the year-to-date low of 0.5915, its lowest point in April.
The pair has moved above the 50-day moving average and the 50-day Exponential Moving Average (EMA). It has also formed an inverse head-and-shoulders-like pattern on the daily chart.
The MACD indicator has formed a bearish divergence, while the Relative Strength Index (RSI) has remained above the neutral point.
Therefore, the pair will likely have a strong bullish breakout, with the next point to watch being the psychological point at 0.6600.
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Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
