Fundamental Overview
The USD got a boost last week from the strong US PMIs which lifted Treasury yields and put in question the rate cut in September. Once the market digested the report and saw that there was more good news on the growth side than bad news on inflation, the USD strength faded fast.
The AUD, on the other hand, has been supported by a slightly more hawkish RBA after the latest hot CPI data and the positive risk sentiment due to the pickup in global growth.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD fell back below the key 0.6650 zone. The price is now retesting the support-turned-resistance and that’s where the sellers will likely step in with a defined risk above the resistance to position for a drop into the 0.6464 level.
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 0.6870 high.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price bounced just before the key support at 0.6580 where we had the confluence of the previous swing low and the 38.2% Fibonacci retracement level. This is going to be the first target for the sellers with a break below it opening the door for a fall into the 0.6464 level.
If the price were to get back into the 0.6580 support, the buyers will likely lean on it to position for a breakout of the 0.6650 resistance with a better risk to reward setup.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have the upper limit of the average daily range (marked by the red line) right at the resistance. Therefore, it’s unlikely that we will get a breakout today, but this zone will be key in the next few days.
Upcoming Catalysts
Tomorrow we get the US Consumer Confidence report where the focus will likely be on the labour market details. On Thursday, we will see the latest US Jobless Claims figures. Finally on Friday, we conclude the week with the US PCE report.
