Fundamental Overview
Since last Friday, the USD has been mostly weak as Fed Chair Powell delivered a more dovish than expected speech at the Jackson Hole Symposium where he basically kept the door open for a 50 bps cut at the September meeting. In fact, the line saying that they will do everything they can to support a strong labour market was key.
That pushed Treasury yields lower and weighed on the greenback across the board. In fact, the recent appreciation of the AUD has been mostly driven by the US Dollar side of the equation, but it outperformed its peers due to the hawkish RBA stance.
Today, we got the monthly Australian CPI report where the data showed further easing in the underlying inflation measures which is going to be good news for the RBA. The market expects the central bank to cut rates by 25 bps in December.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD probed above the 0.68 handle tonight following the Australian CPI data but failed to keep the gains as the details in the report showed an easing in underlying inflation.
We can expect the sellers to step in around these levels with a defined risk above the 0.68 handle to position for a drop into the 0.67 handle. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.6870 high.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a trendline defining the current bullish momentum. We can expect the buyers to lean on it with a defined risk below it to position for a break above the 0.68 handle and a rally into the 0.6870 high. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.67 handle.
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 a reaction around the key levels where the buyers will look for a bounce on the trendline and a break above the resistance, while the sellers will look for a break below the trendline and a drop into the 0.67 handle. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we get the latest US Jobless Claims figures, while on Friday, we conclude the week with the US PCE report.