Bullish Pattern Points to a Rebound

The AUD/USD reacted mildly to the latest minutes of the Reserve Bank of Australia.

• Buy the AUD/USD pair and set a take-profit at 0.6890.
• Add a stop-loss at 0.6700.
• Timeline: 1-2 days.

• Sell the AUD/USD pair and set a take-profit at 0.6700.
• Add a stop-loss at 0.6855.

The AUD/USD pair was flat on Wednesday morning ahead of the latest Australian jobs numbers. The exchange rate was trading at 0.6810, which was much lower than last Friday’s high of 0.6895.

The AUD/USD reacted mildly to the latest minutes of the Reserve Bank of Australia. These minutes showed that the bank’s officials were concerned about the labor market when it left interest rates intact this month.

Also, the members argued that they needed more time to assess the impact of the recent interest rates on inflation and household spending. Therefore, analysts expect the RBA to decide on the next action after seeing the latest inflation data.

The RBA will also watch the labor market data scheduled for Thursday. Economists polled by Reuters expect the numbers to show that the labor market remained tight in June. Precisely, they believe that the unemployment rate remained at 3.6%.

They also see the participation rate remaining at 66.9% as the economy added 17k jobs. In recent statements, Michele Bullock, the incoming RBA governor has said that the unemployment rate needs to rise to 4.5% to bring inflation down to the 2% target.

The AUD/USD pair reacted mildly to economic numbers from the United States. Retail sales dropped from 0.5% in May to 0.2% in June. They rose by 1.49% from a year earlier, lower than the expected 1.49%.

More data revealed that manufacturing and industrial production and capacity utilization dropped modestly in June. This is a sign that the American economy is indeed slowing.

The US will publish the latest building permits and housing starts numbers later today. While other sectors are slowing, the housing industry seems to be emerging at a faster pace than expected.

The AUD/USD pair peaked at 0.6895 last Friday and then pulled back this week. Last week’s highest pint was the upper side of the cup and handle pattern. This retreat is part of the handle section. It remains slightly above the 25-period and 50-period moving averages while the MACD indicator has pointed downwards.

The pair will likely resume the bullish trend as buyers target the upper side of the cup pattern at 0.6895. A drop below the support at 0.6780 will signal that there are still more sellers in the market.

Ready to trade our daily Forex signals? Here’s a list of some of the best Forex platforms Australia to check out.