Fundamental Overview
The USD started the week on the backfoot as the new month begins. The last week’s strength might have been influenced more by quarter-end flows rather than something fundamental as the economic data didn’t change interest rates expectations. Nonetheless, the data should continue to support the risk sentiment amid a pickup in growth without inflationary pressures.
The AUD, on the other hand, should be favoured in such environment as it’s also backed by a slightly more hawkish RBA. Last week, the Aussie got a boost from another hot monthly CPI report which raised the chances of a rate hike, although RBA’s Hauser poured some cold water on the expectations as he would rather hold rates steady for longer.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD is 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 recent price action has formed another minor range between the 0.6625 support and the 0.6680 resistance. From a risk management perspective, the buyers will definitely have a better risk to reward setup around the supports, while the sellers will want to lean on the resistances.
Nevertheless, if the price stays above the 0.6680 resistance, the buyers should remain in control and extend the rally into the 0.6713 resistance. The red lines define the average daily range for today.
Upcoming Catalysts
This week is full of important events. We begin today with the release of the US ISM Manufacturing PMI. Tomorrow, we have the US Job Openings and Fed Chair Powell speaking. On Wednesday, we get the US ADP, the US Jobless Claims, the US ISM Services PMI and the FOMC Meeting Minutes. Thursday is going to be a US Holiday for Independence Day. Finally, on Friday, we conclude the week with the US NFP report.
