USD

  • The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
  • Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
  • The US CPI and the US PPI beat expectations for the second consecutive month.
  • The US Jobless Claims beat expectations.
  • The latest US Manufacturing PMI beat expectations while the Services PMI missed slightly. Both the measures remain in expansion though.
  • The US Consumer Confidence missed expectations although the labour market details improved.
  • The market expects the first rate cut in June.

AUD

  • The RBA left interest rates unchanged as expected at the last meeting and finally dropped the tightening bias.
  • The last Monthly CPI report came in line with expectations although the underlying inflation measure increased from the prior month.
  • 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 showed the Manufacturing PMI falling further into contraction while the Services PMI continue to increase and remain in expansion.
  • The market expects the first rate cut in August.

AUDUSD Technical Analysis – Daily Timeframe

AUDUSD Technical Analysis
AUDUSD Daily

On the daily chart, we can see that AUDUSD has tested the key support zone around the 0.65 level several times in the last couple of weeks, and yesterday finally fell below it. The sellers should now have even more conviction for a drop into the 0.6443 low and will likely increase the bearish bets. The buyers, on the other hand, will want to see the price getting back above the key support to invalidate the bearish setup and position for a rally into the 0.6623 resistance.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that we have the red 21 moving average acting as dynamic resistance and the black minor trendline defining the current downtrend. If the price were to pull back into the trendline, we can expect the sellers to lean onto it to position for a drop into the 0.6443 level with a better risk to reward setup. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into the 0.6623 resistance.

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 the price yesterday breaking below the key support and coming back to retest it. We will likely see some consolidation here as we head into the US PCE report.

Upcoming Events

Today we conclude the week with the US PCE and Fed Chair Powell.