Bearish Flag Points to a Drop to 0.660

The AUD/USD pair will next react to the upcoming economic data from the United States.

• Sell the AUD/USD pair and set a take-profit at 0.6600.
• Add a stop-loss at 0.6730.
• Timeline: 1-2 days.

• Buy the AUD/USD pair and set a take-profit at 0.6730.
• Add a stop-loss at 0.6625.

The Australian dollar continued selling off as geopolitical risks continued. The AUD/USD pair retreated to a low of 0.6660, the lowest point since June 8th of this year. It has dropped from the month-to-date high of 0.6896.

The Aussie retreated sharply as concerns about geopolitics continued. This risk-off sentiment was seen in the performance of key assets. The VIX index rose by more than 4% while American indices like the Dow Jones and S&P 500 dropped slightly.

This risk emerged during the weekend when the Wagner Group attempted to match its army to Moscow. In a statement on Monday, Yevgeny Prigozhin refuted claims that his army wanted to overthrow the Russian government. Instead, it was a protest against key military leaders in the country.

Analysts believe that an escalation of the crisis will lead to more demand for US dollars. USD is widely seen as a safe haven in times of crisis. In a note on Monday, analysts at Commonwealth Bank warned that the AUD/USD would drop to 0.6400 if the crisis escalates.

While risks of a bloody coup in Russia have eased, investors are now factoring in more uncertainty and civil unrest in the country.

The AUD/USD pair will next react to the upcoming economic data from the United States. First, the US will publish the latest durable goods orders numbers. These are notable numbers since they predict the performance of the economy.

Economists expect the data to show that the headline and core durable goods orders dropped by 0.2% and 1.0%, respectively. The US will also publish the closely-watched house price index (HPI) data. House prices have done well recently because of low inventories.

The most important data to watch will be the upcoming consumer confidence figure by Conference Board. Economists expect the numbers to show that confidence rose gradually in June.

The AUD/USD pair has been in a bearish trend in the past few days. It has managed to flip the important support level at 0.6817 (May 10 high) into a resistance. At the same time, the 25-period and 50-period moving averages are about to make a bearish crossover. It has also dropped below the Woodie pivot point.

Most importantly, the pair formed a bearish flag pattern. Therefore, the pair will continue rising as buyers target the key support at 0.6700.

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