Fundamental Overview
The USD continues to be backed by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report yesterday. Although such data keeps the interest rates expectations stable around two cuts by the end of the year, it also supports the risk sentiment amid a pickup in growth. This could be a headwind for the greenback.
The AUD, on the other hand, has been supported recently by a better risk sentiment and the slightly more hawkish RBA policy decision. Today, the Aussie got a boost from another hot monthly CPI report which raised the chances of a rate hike.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD is now getting close to the key resistance zone around the 0.6713 level. All else being equal, the fundamentals are in place for an upside breakout. That’s what the buyers will want to see to increase the bullish bets into the 0.6870 level next.
The sellers, on the other hand, will likely step in around the 0.6713 resistance zone with a defined risk above it to position for a drop back into the bottom of the range at 0.66.
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 need to break to start a more sustained trend. For now, we could keep bouncing around until we get a clear breakout.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price pulled back from the upper limit of the average daily range. We have a good support around the 0.6672 level where we can also find the confluence of the 38.2% Fibonacci retracement level.
This is where we can expect the buyers to step in with a defined risk below the support to position for a continuation of the rally. The sellers, on the other hand, will want to see the price falling below the support to start targeting a drop back into the 0.66 support.
Upcoming Catalysts
Tomorrow we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US PCE report.