Fundamental Overview
The USD last week lost ground across the board following the soft US CPI report as the market priced back in two rate cuts by the end of the year. The moves were reversed soon after though as we got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for this year despite the soft US CPI report.
Fed Chair Powell backpedalled on the projections nonetheless making them a bit less worrying as the central bank remains very data dependent. The rally in the US Dollar eventually picked up steam as the risk sentiment turned more cautious.
The AUD, on the other hand, got pressured mainly because of the risk-off sentiment and the US Dollar strength. This week, we have the RBA rate decision where the central bank is expected to keep the Cash Rate unchanged and keep their hawkish stance.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD spiked into the top of the range around the 0.67 handle following the soft US CPI release but eventually dropped back into the bottom of the range following the more hawkish than expected FOMC decision and the risk-off sentiment.
This is where we can expect the buyers to step in with a defined risk below the support to position for a rally back into the resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.65 handle next.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action between the 0.67 resistance and the 0.66 support. These will be the key levels that the market will likely need to break to start a more sustained trend. For now, will could keep bouncing around as the market awaits new catalysts.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we are starting to consolidate around the support as the price action became more rangebound. The buyers will want to see the price breaking above the trendline and the 0.6620 level to gain more conviction and increase the bullish bets into the 0.67 handle.
The sellers, on the other hand, will likely lean on the trendline to position for a break below the key support with a defined risk. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the RBA Policy Decision and later in the day the US Retail Sales and US Industrial Production. On Thursday, we get the US Housing Starts, Building Permits and US Jobless Claims figures. On Friday, we conclude the week with the Australian and US PMIs.
