On the daily chart below for AUDUSD, we can see that the buyers couldn’t break above the 0.6781 resistance and the 38.2% Fibonacci retracement level. That’s where bad US economic data started to come in and the market began to have recessionary vibes. In such instances, the US Dollar is the go-to currency, especially against the commodity currencies like the Australian Dollar.
The moving averages have crossed to the downside, although not much yet, but this may be a bad omen for the buyers. The market today will be focused on the US CPI report and surprises are likely to cause big movements.
AUDUSD technical analysis
On the 4 hour chart below, we can see that the price was trading in a channel rallying into the 0.6781 resistance. As the breakout failed, the price fell strongly, and it even broke below the lower bound of the channel. The moving averages are crossed to the downside and the red long period moving average will act as resistance now.
The natural target for the sellers is the previous low at 0.6563. We should see the sellers piling in aggressively in case the CPI beats expectations, while the buyers are likely to regain control in case the CPI misses.
On the 1 hour chart below, we can see that at the moment there’s a bit of consolidation ahead of the CPI report. The market is erring on the cautious side as surprises can cause aggressive movements. This little range can be a good starting point for both buyers and sellers.
A break above would be bullish and give the buyers the conviction to target the resistance at 0.6781. On the other hand, a break below would give the sellers control and the target would be the support at 0.6563.
