Fundamental Overview
The US Dollar got a bit of a boost this week as Fed Chair Powell reiterated that 50 bps of easing by year end remains the base case. The market’s probability for the Fed to cut by 50 bps in November fell from 51% to 40% as a result.
On the data side, the ISM Manufacturing PMI released yesterday missed expectations slightly. On the bright side, the new orders index improved a little which might be an early signal of better times ahead. By contrast, the employment component fell further into contraction but remained above the cycle low.
On the AUD side, the RBA kept the Cash Rate unchanged as expected at the last meeting and although Governor Bullock maintained her hawkish stance, the language was toned down a little. The market expects the first cut to come in February 2025.
The recent monthly Australian CPI missed expectations and although it didn’t change much the market’s pricing it was still an improvement. The AUD should also be supported in the bigger picture as global growth picks up with the recent Chinese easing measures.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD is consolidating right above the key 0.6870 level. This is where we can expect the buyers to pile in with a defined risk below the level to position for a rally into new highs. The sellers, on the other hand, will want to see the price falling back below the key level to position for a pullback into the 0.68 handle.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong support zone around the 0.68 handle where we can find the confluence of the trendline and the 38.2% Fibonacci retracement level. If we get a pullback into the support, the buyers will likely step in with a defined risk below the trendline to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.66 handle next.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor downward trendline defining the current pullback. We can expect the sellers to keep leaning on it to position for further downside, while the buyers will look for a break higher to target new highs. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US ADP report. Tomorrow, we get the latest US Jobless Claims figures and the US ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP report.
