Fundamental Overview
The bullish momentum in the US Dollar seems to be waning despite the recent higher-than-expected US CPI and PPI reports. One caveat is that the market has now priced out the aggressive rate cuts expectations and it’s almost perfectly in line with the Fed’s projections.
Therefore, we will likely need more strong US data to see the market pricing in an earlier pause in the Fed’s easing cycle and give the US Dollar a further boost. The next big risk events will be in November when we get the October data, the FOMC policy decision and the US election.
On the AUD side, the RBA continues to maintain its hawkish stance although that was toned down a bit in the last meeting. Tomorrow, we get the Australian labour market report but unless we get big deviations from the expectations, it’s unlikely to influence the current pricing.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD continues to drop although the momentum slowed down. The target for the sellers should be the 0.6622 level. That’s where we can expect the buyers to step in with a defined risk below the level to position for a rally back into the 0.68 handle.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a downward trendline defining the current bearish momentum. The sellers will likely keep on leaning on it to position for further downside, while the buyers will want to see the price breaking higher to pile in for a rally into new highs.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action with the trendline acting as a strong barrier. We have now a strong resistance around the 0.67 handle that the buyers will need to break to start targeting new highs, while the sellers will look for a rejection to pile in for new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the Australian Labour Market report, the US Retail Sales and the US Jobless Claims data.