The pair will likely continue falling as sellers target the next key support level at 0.6950.
Sell the AUD/USD pair and set a take-profit at 0.6950.Add a stop-loss at 0.7050.Timeline: 1-2 days.
Set a buy-stop at 0.7050 and a take-profit at 0.7150.Add a stop-loss at 0.6970.
The AUD/USD price dropped to a low of 0.700 as the market reacted to the latest minutes by the Reserve Bank of Australia (RBA). The price was about 2% below the highest level this month ahead of the latest US retail sales and FOMC minutes.
FOMC Minutes and US Retail Sales
The AUD/USD has been in a strong bearish trend as the market waited for the upcoming US retail sales numbers. These are important data because consumer spending is the biggest part of the American economy.
Economists expect the numbers to reveal that the volume of retail sales dropped in July this year. They believe that sales dropped from 1.0% in June to 0.1% in July. In the same period, analysts expect that core sales dropped from 1.0% to -0.1% in July.
These results comes a day after the some of the biggest retailers in the country published their results. Walmart said that its revenue rose by 8.4% in the second quarter to $152.85 billion. Similarly, Home Depot, the biggest home improvement retailer, said that its net income rose to $5.17 billion. Other firms like Target and Lowe’s are expected to publish strong results.
The AUD/USD price will also react to the latest minutes by the Federal Open Market Committee (FOMC). These minutes will provide more details about the deliberations took place in its July meeting. In it, the bank decided to hike interest rates by 0.75% and continue with its quantitative tightening policy.
Most Fed officials believe that the bank will continue hiking interest rates even after last week’s weak inflation numbers. The data showed that the country’s inflation dropped slightly in June as gasoline prices dropped.
The AUD/USD price dropped to 0.700, which was the lowest level since August 10. On the four-hour chart, the pair moved slightly below the important support level at 0.7050, which was the highest point on August 1st. It moved slightly below the 25-day and 50-day moving averages and the standard pivot point.
The pair has also formed a break and retest pattern by retesting the key point at 0.7050. Therefore, the pair will likely continue falling as sellers target the next key support level at 0.6950. A move above the resistance at 0.7055 will invalidate the bearish view.
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