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.
  • The US CPI beat expectations for the third consecutive month, while the US PPI came in line with forecasts.
  • The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
  • The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
  • The market now expects the first rate cut in September.

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 got rejected by the key 0.6623 resistance and sold off all the way back to the key support zone around the 0.65 handle. Today the price broke down and the sellers are now targeting the 0.6443 low. That’s where we will likely find the buyers stepping in with a defined risk below the level to position for a rally back 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 the price yesterday bounced on the 0.65 support zone but got rejected by the minor resistance zone around the 0.6550 level where we had also the 38.2% Fibonacci retracement level for confluence. The sellers stepped in with a defined risk above the zone to position for a drop into the 0.6443 low and increase the bearish bets as soon as the price broke down. The buyers might try to step in around the recent low at 0.6480, although the 0.6443 level looks much better from a risk management perspective.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see that the price is starting to diverge with the MACD as it approaches the 0.6480 low. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be a signal for a bounce on the low, but the sellers will likely sell an eventual rally into the trendline to position for a break into new lows.

Upcoming Events

Today we conclude the week with the University of Michigan Consumer Sentiment Survey.