USD

  • The Fed left interest rates unchanged as expected at the last meeting with a shift in the statement that indicated the end of the tightening cycle.
  • The Summary of Economic Projections showed a downward revision to Growth and Core PCE in 2024 while the Unemployment Rate was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts in 2024 compared to just two in the last projection.
  • Fed Chair Powell didn't push back against the strong dovish pricing and even said that they are focused on not making the mistake of holding rates high for too long.
  • The latest US CPI slightly beat expectations but analysts expect the Core PCE to print at 0.2% M/M again following the CPI data.
  • The labour market continues to soften although Initial Claims keep on hovering around cycle lows while Continuing Claims got stuck at a higher level.
  • The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
  • The hawkish Fed members have been leaning on a more neutral side lately.
  • The market expects the Fed to start cutting rates in Q1 2024.

AUD

  • The RBA left interest rates unchanged as expected at the last meeting with the central bank maintaining the usual data dependent language.
  • The recent Monthly CPI report missed expectations across the board which is another welcome development for the RBA.
  • The latest labour market report beat forecasts across the board although the unemployment rate rose more than expected.
  • The wage price index surprised to the upside as wage growth in Australia remains strong.
  • The Australian PMIs improved recently but remain in contraction.
  • The market expects the RBA to start cutting rates in Q3 2024.

AUDUSD Technical Analysis – Daily Timeframe

AUDUSD Technical Analysis
AUDUSD Daily

On the daily chart, we can see that AUDUSD continues to consolidate at a key support zone around the 0.6670 level where we can also find the 61.8% Fibonacci retracement level for confluence. The buyers are likely to keep piling in here with a defined risk below the support to position for a rally into the 0.69 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.65 handle.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that the recent price action has been rangebound as the market remains uncertain where to go next given the mixed economic data. If the price breaks above the minor trendline we can expect the buyers to increase the bullish bets into the 0.69 handle while a break below the support will likely trigger a selloff into the 0.65 level.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see more closely the recent price action with no clear level where to lean onto except the support zone and the minor trendline. The best strategy is generally to sit out and wait for a breakout supported by a fundamental catalyst, although one can also “play the range” by buying at support and selling at resistance.

Upcoming Events

Today the only notable event on the agenda is the US PPI data.