There will be no major economic event from Australia today.
- Sell the AUD/USD pair and set a take-profit at 0.6563.
- Add a stop-loss at 0.6650.
- Timeline: 1-3 days.
- Set a buy-stop at 0.6640 and a take-profit at 0.6740.
- Add a stop-loss at 0.6550.
The AUD/USD pair dropped as concerns about the US debt ceiling issue and as traders waited for the upcoming Fed minutes. The pair dropped to a low of 0.6610, the lowest level since April 28th. It has retreated from this month’s high of 0.6817.
The AUD/USD pair retreated as the US dollar index jumped by 30 basis points to $103.40. This rebound happened as traders embraced a more risk-off sentiment because of the ongoing debt ceiling issue. In a statement, Speaker Kevin McCarthy said that a deal was elusive even as talks continued.
Analysts believe that the two sides will ultimately reach an agreement in the coming days. In an interview with Bloomberg Ken Moelis, a legendary investment banker, said that he believes that a deal will be made a day before the June 1 deadline. Traders will continue focusing on these deliberations on Wednesday.
The pair also retreated as tensions between the US and China continued. Earlier this week, China announced that it was blocking Micron’s products from important components. And in a statement on Tuesday, the new Chinese ambassador to the US warned that relations between the two superpowers were facing challenges.
There will be no major economic event from Australia today. Therefore, the focus will be on the upcoming FOMC minutes, which will provide more information about the last meeting. In that meeting, the Fed decided to hike rates by 0.25% to 5.25%. It also decided to continue with its quantitative tightening policy.
Therefore, these minutes will provide more color about the deep deliberations that happening in that meeting. Historically, traders use these minutes to assess what members said and what to expect in the coming meetings.
The AUD/USD pair has been in a strong bearish trend in the past few days. It has moved below the important support at 0.6620, the lowest point on April 10. The pair is also trading at key support, which was the lowest level on Friday.
It has moved below the 25-period moving average while the Relative Strength Index (RSI) has moved below the neutral point of 50. It is also below the super trend indicator. Therefore, the pair will likely continue falling as sellers target the important support level at 0.6563, the lowest level this year.
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