Bearish Outlook
- Sell AUD/USD pairs and set a take profit target at 0.6350.
- Implement a stop loss at 0.6550.
- Expected timeframe: 1-2 days.
Strong Bullish Perspective
- Buy the AUD/USD pair with a take profit target at 0.6550.
- Place a stop loss at 0.6350.
The AUD/USD exchange rate has been declining, influenced by rising geopolitical tensions following the recent bombings in Iran. The pair dropped to 0.6450, noticeably down from its yearly peak of 0.6550.
US Dollar Gains Amid Safety Moves
The past few days have seen the AUD/USD rate falling as the US dollar index gained traction, hitting $100 for the first time in a while.
This decline occurred as investors shifted towards the safety of the US dollar amidst increasing geopolitical uncertainties. On Saturday, Donald Trump confirmed that the US executed bomb attacks on three significant nuclear sites.
This action instigated further missile exchanges between Israel and Iran. Additionally, Brent crude prices have surged, nearing substantial resistance at $80 per barrel for the first time this year.
Shipping expenses are anticipated to climb as risks in navigating Iranian waters rise. Recent reports indicate that transportation costs have surged over recent months as tensions escalated.
This situation, combined with Trump’s tariffs, may fuel inflation, complicating the Federal Reserve’s efforts to reduce interest rates, a desire echoed by Trump himself.
Looking ahead, the next important macro data will come from the US, with S&P Global preparing to release the latest Flash Manufacturing PMI data. Economists are hoping for a decline in manufacturing PMI to 51.2 in May, while service PMI is expected to drop to about 52.9.
The US will unveil its latest consumer confidence figures on Tuesday, followed by personal consumption expenditure data later in the week.
AUD/USD Technical Analysis
The AUD/USD exchange rate has faced a pullback, moving from 0.6550 down to a low of 0.6450—its lowest point since early June. It sits below the 50% Fibonacci retracement level at 0.6426.
Furthermore, the pair has fallen below the rising channel. The percentage price oscillator (PPO) indicator is showing a bearish divergence pattern, which is pulling back the relative strength index (RSI).
This suggests potential continued declines, with sellers eyeing a crucial support level at 0.6300. A breakthrough past 0.6550 would negate the current bearish sentiment.
