Fundamental Overview
It looks like the market is taking some breather after an incredible rally in the US Dollar. This week was pretty empty on the data front, and we haven’t got any meaningful catalyst. The main culprit for the US Dollar strength has been the rally in long term Treasury yields.
The yield curve has been bear-flattening which is what you would expect with higher growth and potentially higher inflation expectations. There’s been a good argument that the markets have been already positioning for a Trump victory which is expected to strengthen the higher growth and less rate cuts expectations.
For now, this is the trend and it’s generally a bad idea to fight such trends without a strong catalyst. Unfortunately, we don’t have much left for October as the main events will be in the first weeks of November when we will get the top tier economic reports, the US elections and the FOMC decision.
On the AUD side, the latest data has been pretty strong with the Australian labour market report last week beating expectations by a big margin. Although it didn’t change much in terms of interest rate expectations, it reinforces the RBA’s hawkish stance.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD is bouncing from the key swing level at 0.6622. This is where the buyers are stepping in with a defined risk below the level to position for a rally into the 0.68 handle. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.65 handle next.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong resistance level at 0.6660 where we can also find the trendline for confluence. If we get a pullback into the resistance, we can expect the sellers to step in with a defined risk above the level to position for the break below the 0.6622 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.68 handle.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action with the several rejections from the 0.6622 support as the sellers have been struggling to break through. There’s not much more we can add as the sellers will look to short from the trendline or on a break lower, while the buyers will want to see the price breaking the resistance to increase the bullish bets into new highs. The red lines define the average daily range for today.
