Fundamental Overview
The USD weakened across the board last week due to a more dovish than expected FOMC decision last week where the Fed decided to signal a bigger QT taper beginning in June and the Fed Chair Powell pushing back repeatedly against rate hike expectations. Moreover, the data on Friday showed that the Fed might indeed just keep rates higher for longer as job and wage growth soften. Nevertheless, the USD has been in the driving seat this week despite the lack of economic data or major changes in the fundamentals.
The AUD, on the other hand, has been gaining ground against many major currencies following the latest Australian Q1 CPI report where the data beat expectations by a big margin pushing rate cuts expectations further away to Q2 2025 and raising the chances of a rate hike. The RBA yesterday disappointed the hawks as it didn’t add any hawkish language in the statement and the RBA’s Governor Bullock sounded pretty neutral despite repeating the same old message that they are “not ruling anything in or out”.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD couldn’t break above the key resistance zone around the 0.6650 level as the RBA disappointed the buyers and the USD weakness faded across the board. We will likely need a soft US CPI report next week to push the price beyond the resistance. There’s not much to work with this week, so the technicals might remain in the driving seat.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that from a risk management perspective, the sellers will have a better risk to reward setup around the 0.6577 level where we can find the confluence of the trendline and the 38.2% Fibonacci retracement level. The buyers, on the other hand, will want to see the price breaking to the upside to invalidate the bearish setup and position for a rally back into the 0.6650 resistance.
Upcoming Catalysts
Tomorrow we get the latest US Jobless Claims figures while on Friday we conclude the week with the University of Michigan consumer sentiment survey. It’s unlikely that we will see major changes to the market’s expectations though, and the next big event to watch will be the US CPI next week.
