Fundamental Overview
The USD weakened across the board last Friday following the soft US NFP report. The data showed some more labour market cooling with an increase in the unemployment rate and a decrease in wage growth. We basically have an economy that is slowing but still growing.
We will see if the market will be able to keep the positive sentiment on soft landing hopes or start to worry about a recession.Yesterday, Fed Chair Powell testified to Congress but he didn't offer anything in terms of forward guidance as they want to see more data before signalling any action.
The AUD, on the other hand, gained last week against the US Dollar mainly because of the risk-on sentiment as the US data continued to support at least two rate cuts from the Fed but didn’t send recessionary signals. This week, we are seeing a consolidation as the market awaits the US CPI and Jobless Claims figures tomorrow.
On the monetary policy front, the Aussie got a boost from another hot monthly CPI report last month which raised the chances of a rate hike, although RBA’s Hauser poured some cold water on the expectations as he said that he would rather hold rates steady for longer.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD broke out of the two-month long range last week and consolidated just above it ever since. The resistance around the 0.6713 level has now become support.
That’s where we can expect the buyers to keep piling in with a defined risk below it to position for a rally into the 0.6870 level next. The sellers, on the other hand, will want to see the price falling back below the 0.6713 level to regain some control and position for a drop into the 0.66 handle.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the consolidation just above the 0.6713 level as the market awaits the key economic data tomorrow with the release of the US CPI and Jobless Claims figures. For now, we will likely keep ranging here until we get a breakout on either side.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we now have a good resistance zone around the 0.6750 level. The buyers will want to see the price breaking higher to increase the bullish bets into new highs, while the sellers will likely keep on leaning on the resistance to position for a break below the 0.6713 level. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow will be the most important day of the week as we get the US CPI and the US Jobless Claims figures. On Friday, we conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey.
