AUDUSD Technical Analysis

The NFP report released last Friday once again surpassed expectations, extending its impressive streak of 14 consecutive positive results on the headline number. However, upon closer examination of the report, less promising aspects emerged.

The unemployment rate witnessed a significant rise from 3.4% to 3.7%, marking the largest month-over-month increase since the beginning of the pandemic. Additionally, there was a slight decrease in the average weekly working hours, often considered an indication of potential layoffs by employers. All in all, it was mixed bag and there was something for everyone.

In a separate development, the US ISM Services PMI fell well below expectations, registering at 50.3 and narrowly missing the threshold for contractionary territory. The employment sub-index contracted, and the prices paid sub-index experienced a substantial decrease, returning to levels last observed in May 2020. As a consequence, the market adjusted its expectations, reducing the probability of additional interest rate hikes by the Federal Reserve Federal Reserve The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US.The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US.The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the Read this Term.

The Aussie jumped recently as the RBA unexpectedly hiked rates by 25 bps again stating that further tightening may be required. We also got a big miss in US Jobless Claims yesterday which have further lowered the odds of a hawkish Fed. All else being equal, we should see the pair trending upwards at least until the 0.6781 barring a hot CPI report next week.

AUDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that the failed breakout and the pricing out of hawkish Fed expectations gave the AUDUSD a big boost. Moreover, the recent surprising rate hike from the RBA helped the AUD to make new highs and the big miss in US Jobless Claims yesterday just reinforced the bullish bias. The natural target looks to be the key resistance at the 0.6781 level. The divergence with the MACD between the recent lows strengthens the case for the price testing the 0.6781 resistance again.

AUDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that after breaking out of the downward trendline and the 0.6563 support turned resistance, AUDUSD just kept on rallying with little pullbacks. Recently, the price pulled back after the RBA hike into the swing support at the 0.6640 where the buyers found also the red 21 moving average to lean onto and resumed the rally towards the 0.6781 resistance. We should find sellers leaning on that 0.6781 resistance but until then it looks like the uptrend can continue.

AUDUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we are starting to see a divergence with the MACD right into the 0.6781 resistance. This is generally a sign of a weakening momentum often followed by pullbacks or reversals. For the buyers, a break above the recent high at the 0.6720 level should lead to an extension to the upside. For the sellers, a downside break of the rising channel should lead to a fall towards the 0.6580 level.