Fundamental Overview
The USD has been on the backfoot since the beat in the US ISM Services PMI where the data showed that the last month drop was just a blip and overall we have a resilient economy with lower inflationary pressures.
The data continues to reinforce the narrative that the next move is more likely to be a rate cut, and that inflation is likely to keep coming back to target. This could keep weighing on the greenback as the positive risk sentiment due to the pickup in global growth is generally a headwind.
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. Moreover, the pickup in China’s economy is generally good news for the Aussie as well as it’s Australia’s biggest trading partner.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD continues to range around the key resistance zone at 0.6660. We got multiple failed tries above the resistance as the risk sentiment has been mixed in the past few weeks. We need a catalyst to trigger a sustained move and today’s NFP report might do the job.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the rangebound price action and it’s unlikely to change until the US NFP report. From a risk management perspective, the buyers will have a better risk to reward setup around the 0.66 handle, which could be achieved if today’s data comes out hot across the board.
The sellers, on the other hand, will want to see the price breaking below the 0.66 support to gain more conviction and start targeting new lows.
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 the data will likely confirm or deny the generally positive risk sentiment.
Upcoming Catalysts
Today we conclude the week with the US NFP report where the consensus sees 185K jobs added in May and the unemployment rate remining unchanged at 3.9%. Moreover, the average hourly earnings are seen at 3.9% for the Y/Y figure and 0.3% for the M/M measure.
