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 but remains resilient with US Jobless Claims beating expectations week after week.
  • The latest ISM Manufacturing PMI beat expectations, while the ISM Services PMI missed by a big margin.
  • The US Retail Sales beat expectations across the board.
  • The Fed members recently have been pushing back on the aggressive rate cuts expectations.
  • The market expectation for a rate cut in March fell to roughly 50%.

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 missed expectations by a big margin.
  • The wage price index surprised to the upside as wage growth in Australia remains strong.
  • The latest Australian PMIs improved but remain in contraction.
  • The market expects the RBA to start cutting rates in June.

AUDUSD Technical Analysis – Daily Timeframe

AUDUSD Technical Analysis
AUDUSD Daily

On the daily chart, we can see that AUDUSD bounced on the key support zone around the 0.65 handle as the price got overstretched on the downside as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that from a risk management perspective, the sellers will have a much better risk to reward setup around the downward trendline where they will also find the confluence with the Fibonacci retracement levels. The buyers, on the other hand, will want to see the price breaking above the trendline to invalidate the bearish setup and increase the bullish bets into the 0.69 resistance.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see that the price has been diverging with the MACD as it was approaching the key support zone. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it should be an extra confirmation for a pullback into the trendline. At the moment, we have a minor upward trendline defining the uptrend on this timeframe. The buyers will likely keep on leaning on it to extend the rally into the major trendline while the sellers will want to see the price breaking lower to pile in and target a break below the key support.

Upcoming Events

Today, the only notable event will be the University of Michigan Consumer Sentiment survey.