The next key data to watch will be the US GDP data that are scheduled for Thursday.
Set a sell-stop at 0.6425 and a take-profit at 0.6250.Add a stop-loss at 0.6600.Timeline: 1-2 days.
Set a buy-stop at 0.6600 and a take-profit at 0.6700.Add a stop-loss at 0.6500.
The AUD/USD price pulled back slightly in the overnight session as investors moved to buy the dip following the recent crash. The pair rose to a high of 0.6550, which was the highest point since Monday this week.
Australian dollar stabilizes
The Australian dollar rose during the American and Asian sessions as the recent dollar strength took a breather. After soaring to a high of $114.50, the dollar index pulled back to $113.20 as buyers started taking profit.
The US dollar retreated after the relatively weak pending home sales data from the United States. These numbers showed that sales dropped by 2.0% in August of this year after falling by 0.6% in July. The pending home sales index dropped from 90.2 to 88.4.
These numbers came a day after the US published strong new home sales and consumer confidence data. As such, analysts believe that the FederaL Reserve will continue hiking interest rates in the coming months. The baseline situation is where the bank hikes by 0.75% in November and 0.50% in December.
This view was supported by Raphael Bostic, the gead of Atlanta Fed. In his statement, he said that the backed a 0.75% hike since the economy has a considerable amount of momentum. If this happens, the federal funds rate will rise from the current range of 3% to 3.25% to 4.25% to 4.5%. Analysts expect that the Reserve Bank of Australia (RBA) will also hike rates next week.
The next key data to watch will be the US GDP data that are scheduled for Thursday. The data is expected to confirm that the American economy indeed moved to a recession in Q2. Still, this data will have a mild impact on the pair since it has already been priced in.
The four-hour chart shows that the AUD/USD pair made a strong comeback in the overnight session. This rebound happened after the pair formed a doji pattern on Wednesday. It has managed to move slightly above the 25-day moving average while the Awesome Oscillator has turned green.
The rebound also happened after the pair tested the second support of the standard pivot point. Therefore, the pair will likely resume the bearish trend as sellers target the third support level at 0.6210. This view will be confirmed if it moves below the support at 0.6400.