There will be no major news from Australia and the US on Wednesday.
- Buy the AUD/USD pair and set a take-profit at 0.6800.
- Add a stop-loss at 0.6600.
- Timeline: 1-2 days.
- Set a sell-stop at 0.6680 and a take-profit at 0.6550.
- Add a stop-loss at 0.6800.
The Australian dollar remained in a consolidation phase on Wednesday as traders focused on the hawkish RBA minutes and the strong Chinese economic numbers. The AUD/USD pair was trading at 0.6740, where it has been in the past few days.
The main news that moved the AUD/USD pair was the minutes by the Reserve Bank of Australia. These minutes showed that the bank was still committed to fighting inflation which is proving more sticky than expected. As a result, the bank said that it could resume implementing more interest rate hikes in the coming months.
The minutes noted that inflation has been so high while the labor market has tightened so much in the past few months. As a result, the committee judged that it needed more time to gather more information about the state of the economy.
Meanwhile, data from China were hotter than expected as the country emerged from a Covid-zero strategy. It expanded by more than 4%, helped by a robust housing market, higher exports, and consumer spending. Retail sales, fixed asset investments, and industrial production rose in March.
There will be no major news from Australia and the US on Wednesday. Therefore, the pair will react to more corporate earnings from the US.
The daily chart shows that the AUD/USD pair has been moving sideways after bottoming at 0.6560 in March. In this period, the pair has formed a small ascending channel shown in red. It is also hovering at the 38.2% Fibonacci Retracement level.
Most importantly, the pair has formed an inverted head and shoulders pattern whose neckline is at 0.7152. In technical analysis, this pattern is usually a bullish sign. The pair is also oscillating at the 25-day and 50-day moving averages. Therefore, based on this chart, the pair will likely remain in this range in the next few days and then have a bullish breakout.
The AUD/USD has also been consolidating recently, with the current price being lower than last week’s high of 0.6800. As in the daily chart, the pair is trading at the 25-day and 50-day moving averages. It is also slightly above the lower side of the ascending channel. The Australian dollar is also at the Woodie pivot point.
Therefore, it will also remain in this range on Wednesday since there will be no major economic data or events.