Fundamental Overview
The USD yesterday was sold across the board following the soft US CPI report. The data made the market to price back in two cuts for this year. Later in the day though we got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed sees just one cut for this year despite the soft US CPI report.
This gave the greenback a boost, but Fed Chair Powell backpedalled on the projections making them a bit less worrying as the central bank remains very data dependent. So, all in all, the US Dollar might still come under pressure as the risk sentiment should improve thanks to the soft US CPI.
The AUD, on the other hand, has been supported by a slightly more hawkish RBA 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.
Today, we also got a good Australian labour market report which doesn’t change anything for the RBA but should still keep the currency supported in case we go back into risk-on.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD spiked into the top of the range around the 0.67 handle following the US CPI release. The sellers stepped in with a defined risk above the resistance to position for a drop back into the bottom of the range. The buyers will want to see the price breaking above the resistance to gain even more conviction and start targeting the 0.6870 level.
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. The price at the moment is right in the middle of the range, so from a risk management perspective there’s not much to do here although if the momentum were to change on the lower timeframe, we could see the bullish sentiment picking up steam.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the spike on the US CPI release and the pullback on the more hawkish than expected FOMC decision. If the price were to break above the blue line around the 0.6667 level, the bullish momentum will likely pick up and we might see a rally back into the top of the range. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US PPI and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment survey.
