Fundamental Overview
The USD weakened across the board following soft US Jobless Claims and ISM Services PMI reports. Overall, the data didn’t change much in terms of interest rates expectations, but it reinforced the view that the Fed is going to deliver at least two rate cuts by the end of the year.
The AUD, on the other hand, has been under pressure mainly due to the US Dollar strength last week which has been influenced more by quarter-end flows rather than something fundamental. This week, the US Dollar is back on the defensive as the market continues to trade the soft-landing narrative.
Moreover, the Australian Dollar should be favoured in such environment as it’s also backed by a slightly more hawkish RBA. Recently, the Aussie got a boost from another hot monthly CPI report which raised the chances of a rate hike, although RBA’s Hauser poured some cold water on the expectations as he would rather hold rates steady for longer.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD broke out of the two-month long range recently as the price rallied above the key resistance around the 0.6713 level following the soft US data on Wednesday.
We should see the buyers increasing the bullish bets around this level to position for a rally into the 0.6870 level next. The sellers, on the other hand, will want to see the price falling back inside the range to invalidate the breakout and position for a drop into the 0.66 support.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the breakouts of the recent mini range at 0.6680 and the major one at 0.6713. The US NFP report today is going to be key. If we get bad data, the market might go into risk-off and leave behind a fakeout as the pair will likely fall back inside the range. A good or benign report, on the other hand, should confirm the breakout and lead to a more sustained uptrend.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we now have a good support around the 0.6700-0.6713 zone where we can also find the 38.2% Fibonacci retracement level for confluence. If we get a pullback, that’s where the buyers will likely step in to position for the continuation of the uptrend.
The sellers, on the other hand, will want to see the price breaking lower to position for a drop back into the bottom of the range around the 0.66 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report where the data is expected to show 190K jobs added in June and the Unemployment Rate to remain unchanged at 4.0%.
