Fundamental Overview
The USD has been rallying steadily against the major currencies since last Wednesday, although it’s unclear what has been behind the move. From the monetary policy perspective, nothing has changed as the market continues to expect at least two rate cuts by the end of the year and sees some chances of a back-to-back cut in November.
The data continues to suggest that the US economy remains resilient with inflation slowly falling back to target. Overall, this should continue to support the soft-landing narrative and be positive for risk sentiment. The new driver could be Trump now looking more and more like a potential winner and his policies are seen as inflationary which could see the Fed eventually going even more slowly on rate cuts.
The AUD, on the other hand, has been supported on the back of a hawkish RBA given the sticky inflation and the positive risk sentiment, although that strength has waned in the recent weeks. The next key event for the Australian Dollar will be the Australian Q2 CPI report next week.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD dropped all the way back to the key support zone around the 0.66 handle. This is where we can expect the buyers to step in with a defined risk below the support to position for a rally into the 0.6713 resistance. 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 downward trendline defining the current bearish momentum. The buyers will want to see the price breaking above the trendline to gain some more confidence on further upside and increase the bullish bets into the resistance.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the trendline. If we get a bounce from the support zone, the sellers will likely lean on the trendline to position for a break below the support with a better risk to reward setup. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Flash PMIs. Tomorrow, we will get the latest US Jobless Claims figures. Finally, on Friday we conclude the week with the US PCE report.