Fundamental Overview
The US Dollar has come back under pressure recently as we got a couple of soft US data. The US ISM Manufacturing PMI disappointed the market as it came lower than expected and the new orders index dropped further into contraction. The US Job Openings yesterday showed some more cooling as the data missed expectations by a big margin. The Treasury yields fell as a consequence and weighed on the greenback.
In fact, the recent appreciation of the AUD has been mostly driven by the US Dollar side of the equation. From a monetary policy perspective, there’s now a 50/50 chance of either a 25 or 50 bps cut at the upcoming FOMC meeting, so the NFP report tomorrow will decide by how much the Fed is going to cut. For the RBA, the market sees a 93% probability of no change at the upcoming meeting with a total of 20 bps of easing by year-end.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD probed above the 0.68 handle but eventually dropped all the way back to the key support zone around the 0.67 handle. This is where we can expect the buyers to pile in with a defined risk below the support 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 0.60 handle next.
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. We can expect the sellers to lean on it with a defined risk above it to position for a break below the 0.67 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.6870 level.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, there’s not much else we can glean from this timeframe other than waiting for the reaction around the trendline or a break below the support. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US ADP, the US Jobless Claims and the US ISM Services PMI. Tomorrow, we conclude the week with the US NFP report.
