AUD/USD – FOMC Hints At Tapering Talk

#OPINIONLEADER# #Signal#

 MAY 21, 2021

• Recent Australian economic data releases indicate slowdown in recovery
• FOMC minutes reveals some committee members to be hawkish
• Head and Shoulder pattern in AUD/USD (D1)

Chart 1: AUD/USD D1 chart

The Australian job market took a hit in April as the Australian Bureau of Statistics (ABS) reported a decline of 30,600 jobs. This resulted from the ending of the JobKeeper wage subsidy on 28 March. The decline in consumer sentiment by 4.8% does indeed bring some disappointment although overall it is still at a high level. Growth in business activities have started to stagnate in April with expansion levels remaining around the same as in March.

The Australian dollar traded lower against the U.S. dollar when the FOMC expressed signs of hawkishness in its released meeting minutes yesterday, stating that several FOMC committee members felt appropriate to hold discussions on the adjustment of the pace of quantitative easing in the upcoming meetings if the U.S. economy continues to make speedy progress towards the central bank’s goals.

At the moment, a Head and Shoulder pattern in AUD/USD (D1) is forming in progress. Our technical indicators are also showing signs of downward momentum. With the recent Australian economic data releases showing signs of recovery slowdown, if the Head and Shoulder pattern is completed and the neckline is broken, look for selling opportunities.

Head and Shoulder Pattern for AUD/USD (D1)

Sell Stop order at 0.76500