The pair will likely maintain the bullish trend as bulls target the psychological level of 0.7200.
Buy the AUD/USD pair and set a take-profit at 0.7200.Add a stop-loss at 0.7000.Timeline: 1 day.
Set a sell-stop at 0.7050 and a take-profit at 0.700.Add a stop-loss at 0.77100.
The AUD/USD pair moved sideways as Wall Street investors started warning about the Chinese economy. They are also watching the new Albanese policies and how they will impact the Australian economy. It is trading at 0.7082, which is slightly below this week’s high of 0.7128.
Chinese Economy Downgraded
The ongoing lockdowns in China are having a significant impact on the country’s economy. In a statement on Tuesday, analysts at UBS said that the economy will grow by about 3% this year. This was a lower estimate than the previous 4.2%. They noted that the lingering restrictions and lack of clarity on an exit strategy will hinder industrial production and customer spending.
In a separate statement, JP Morgan analysts said that they expect that the Chinese economy will grow by 3.7%. Their previous estimate was for the economy to expand by 4.3%. Most of this slowdown will happen in the second quarter of this year.
These numbers are important for the AUD/USD pair because of the strong business ties between Australia and China. China buys most goods from Australia.
Recently, however, the relationship between the two countries has been relatively volatile, with China blocking some commodities from Australia. In a statement at the Quad meeting, Anthony Albanese said that he was ready to negotiate with China as long as the country was ready to drop its trade ban and tariffs.
With no economic data from Australia today, focus will be on the upcoming Fed minutes. The minutes will provide more color about the bank’s tightening process. Still, since the bank has already signaled that it will be hawkish, there is a likelihood that the pair will be muted. The other notable data to watch today will be the US durable goods orders.
The AUD/USD pair has been in a strong bullish trend in the past few days. The pair has formed an ascending channel that is shown in black. It also rose above the 25-day and 50-day moving averages and is between the 23.6% and 38.2% Fibonacci retracement level.
Therefore, the pair will likely maintain the bullish trend as bulls target the psychological level of 0.7200. On the flip side, a drop below the support level at 0.7035 will invalidate the bullish outlook.