Retest of Resistance at 0.7036 Likely

The AUD/USD pair tilted upwards on Monday morning as investors continue focusing on the upcoming Australian election and important economic events.

Bullish view

• Buy the AUD/USD pair and set a take-profit at 0.7036.
• Add a stop-loss at 0.6850.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 0.6895 and a take-profit at 0.6800.
• Add a stop-loss at 0.700.

The AUD/USD pair tilted upwards on Monday morning as investors continue focusing on the upcoming Australian election and important economic events. It is trading at 0.6940, which is a few points above last week’s low of 0.6832.

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Australia election ahead

The biggest catalyst for the AUD/USD pair is the upcoming Australian election in which Scott Morrison is dueling with Anthony Albanese. The election will happen in the coming weekend and analysts believe that the outcome will be relatively close. The most recent polls have Albanese lading although the situation could change this week.

The pair also tilted upwards after data from China showed the impact of the current lockdowns to the economy. According to the National Bureau of Statistics (NBS), the country’s retail sales and industrial production were a bit weak in April. This happened as Beijing announced a series of lockdowns in key cities.

The next key item to watch will be the upcoming minutes by the Reserve Bank of Australia (RBA) that will come out on Tuesday morning. These minutes will provide a clear picture about the deliberations that the bank’s officials had when they decided to hike interest rates by 0.25%. It was its first rate increase in about 11 years. Analysts will be looking at more signs about the next few meetings.

Additionally, the AUD/USD will react to the upcoming jobs numbers from Australia. The data, which will come out on Thursday, are expected to show that the country’s unemployment rate continued falling as the economic recovery continued.

On the other hand, from the United States, investors will be focusing on the upcoming retail sales numbers that are scheduled for Tuesday. As in March, expectations are that sales declined slightly because of the rising prices. The other important data will be US building permits, housing starts, and exisrting home sales.

AUD/USD forecast

On the 4H chart, the AUD/USD pair formed a small hammer pattern on Thursday last week. In price action analysis, this pattern is usually a bullish sign. The pair has moved slightly above the middle line of the Bollinger Bands while the Relative Strength Index (RSI) continued rising.

Therefore, while the overall trend is bearish, there is a high possibility that it will keep rising as bulls target the key resistance at 0.7165. This was a notable level since it was the lowest point on May 2nd.