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The AUD/USD exchange rate has formed a head and shoulders pattern ahead of a busy week for the Australian dollar. It closed last week at 0.6811 as investors reflected on the latest US non-farm payrolls data.
RBA decision ahead
The Australian dollar will have an eventful week. On Monday, the statistics agency will publish the latest retail sales and company profits data. Economists expect the data to show that the country’s retail sales rose from 0.2% in June to 1.3% in July. Retail sales are important because of the important role that consumer consumption plays in the country.
The biggest catalyst for the pair will be the upcoming interest rate decision by the Reserve Bank of Australia (RBA). Analysts expect that the central bank will continue tightening its monetary policy in a bid to contain the soaring inflation. Hiking rates by 0.50% will bring the headline interest rate from 1.85% to 2.35%.
Other leading central banks have also embraced such a hawkish tone. The Fed has hiked rates by 225 basis points and hinted that the hawkish tone will continue. Similarly, the ECB and the Bank of England have continued hiking. Analysts expect that the ECB will hike by 50 basis points this week.
The AUD/USD price will also react to the latest Australian GDP data. Economists expect the data to show that the economy expanded by 3.8% on a year-on-year basis. On a QoQ basis, they expect that the economy expanded by 1.2%. The other important data will be the latest Australian trade numbers that are scheduled on Thursday.
AUD/USD forecast
The four-hour chart shows that the AUD/USD pair has been in a strong bearish trend in the past few weeks. It has formed a head and shoulders pattern. And last week, it moved below the neckline of this pattern. The pair moved below the 25-day and 50-day moving averages. Therefore, the pair will likely keep falling as sellers target the key support at 0.6700. Learn more about how to send money to Australia.
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