Top-tier inflation reports from Australia and the U.S. could trigger a breakout for AUD/USD this week!
On the hourly chart below, you can see that the forex pair is forming a descending triangle at the middle of its range.
Will we see a breakdown to the range support or a pop higher back to the resistance?
Before you check out the setup, make sure you know all of last week’s major market movers as well as this week’s potential market catalysts!
AUD/USD 1-hour Forex Chart by TradingView
Check out AUD/USD hanging out at the area of interest around the middle of its short-term range!
This happens to be right smack in line with the .6700 major psychological mark and the bottom of a descending triangle pattern.
A bounce off support could take the pair back up to the triangle top just slightly below the .6750 handle while a break lower could spur a selloff to the range bottom around .6735.
Stochastic is pointing to a likely move higher, as the oscillator is on its way up to reflect the presence of upside momentum. Moving averages, on the other hand, are barely offering strong clues in these ranging market conditions.
This week’s top-tier catalysts from both Australia and the U.S. could provide better clues on where AUD/USD might be headed next.
For one, we’ve got Australia’s quarterly CPI that might print a slowdown in price pressures for Q1. After that, the U.S. economy might also report weaker economic activity for the same period.
Keep in mind that a handful of last week’s reports revived U.S. recession fears, so market players might be extra sensitive to downbeat growth data.
Later in the week, Uncle Sam is scheduled to print the core PCE price index, which is rumored to be the Fed’s preferred inflation measure. Analysts are predicting another 0.3% uptick, although some Fed policymakers are eyeing even more subdued inflation data.
With that, AUD/USD might be able to sustain a rally past the small triangle top and onto the range resistance near the .6800 major psychological mark.
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