The pair will likely keep rising as bulls target the key resistance level at 0.7150.
Buy the AUD/USD and set a take-profit at 0.7125.Add a stop-loss at 0.6980.Timeline: 1-2 days.
Set a sell-stop at 0.700 and set a take-profit at 0.6945.Add a stop-loss at 0.7050.
The AUD/USD was little changed on Monday morning as investors reflected on the just concluded election in the country. The pair is trading at 0.7046, which was slightly above last Friday’s low of 0.7000. It has risen by over 3% from its lowest point this month.
Albanese Wins in Australia
The AUD/USD pair rose slightly after the latest election in Australia. In it, Anthony Albanese of the Labor Party won. He now becomes the first Labor Party prime minister on record. His party wom 72 sears in the 151-seat House of Representatives.
Albanese inherits a country that is doing relatively well in most standards. House prices are at elevated levels while the unemployment rate has declined to the lowest level in years. At the same time, the country is seeing robust demand for its commodities like coal and copper.
However, like in other countries, Australia is seeing rising inflation and low wage price index (WPI). This means that while wages are rising gradually, they are still being affected by inflation.
In a statement, Albanese said that he would seek to dive productivity while lifting wages and profits. At the same time, Albanese becomes PM at a time when the Reserve Bank of Australia (RBA) has started hiking interest rates.
With no economic data expected from Australia this week, the AUD/USD pair will react to the new policy proposals by the new administration.
The other key events to watch this week will be from the Unite States. Jerome Poell will spead on Tuesday and possibly reiterate the Fed’s policy. The Fed will then publish minutes of the past meeting on Wednesday. These minutes will provide more information about the next phase of tightening.
The AUD/USD will also react to other important data from the US like GDP, pending home sales, and new home sales numbers.
The four-hour chart shows that the AUD/USD pair has been in an uptrend in the past few days. Along the way, the pair managed to move above the important resistance level at 0.7031, which was the lowest level on May 2. It has also risen above the 25-day and 50-day exponential moving averages while the MACD has moved above the neutral level.
Therefore, the pair will likely keep rising as bulls target the key resistance level at 0.7150. A move below the support level at 0.6980 will invalidate the bullish view.