The FOMC continues to expect two or more rate hikes this year if the economic data remains strong as Fed Chair Powell has also reiterated at the ECB forum last week. In fact, the data has been consistently surprising to the upside since the last FOMC meeting and that led to a more hawkish market’s pricing.
The RBA decided to keep its cash rate unchanged today accompanied by the usual hawkish comments and the promise of doing more if the data suggests so. They repeated their determination of bringing the inflation rate to target and will do what is necessary to achieve that.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that since the tap into the 0.69 handle, AUDUSD sold off pretty heavily with almost no pullbacks into the 0.66 handle where we got a bounce. The price is now probably pulling back as the selloff overstretched. We should start to see sellers piling back in shortly as the price is approaching resistances like the moving averages and previous swing points.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the divergence with the MACD was already signalling a loss of bearish momentum and what follows is generally a pullback or a reversal. In this case, the price broke out of the trendline, consolidated a bit and now we are likely to see an extension to the 0.67 handle where we can find the previous swing high level and the 38.2% Fibonacci retracement level of the entire selloff since 0.69.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price found a strong support at the 0.6640 level and bounced from it after the downward spike after the RBA’s decision. We should now see a rally towards the 0.6710 resistance. The sellers are likely to step in there with a defined risk above the resistance zone and target the 0.6563 support. Alternatively, if the price breaks the 0.6640 support without getting first to the 0.6710 resistance, the sellers should pile in anyway and ride the bearish wave after the breakout. The buyers, on the other hand, should pile in even more aggressively if the price breaks above the 0.6720 level.
Upcoming Events
Today the US is on holiday for Independence Day, so the we see a choppy price action or nothing at all as liquidity is thinner. Nonetheless, we’ll have some important economic releases in the following days like the US Jobless Claims and the ISM Services PMI on Thursday and the main event of the week: the US NFP on Friday.
