Fundamental Overview
The USD has been generally under pressure since the benign US CPI report last week as the hawkish expectations subsided and the market switched its focus from inflation back to growth. This triggered a positive risk sentiment with risk assets like stocks and bitcoin gaining ground.
Such an environment is generally negative for the greenback and positive for commodity currencies like the AUD which should also be supported by the positive developments in China and the RBA likely on hold into 2025.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD last week finally broke above the key resistance zone around the 0.6650 level. The price pulled back soon after into the resistance-turned-support in what could end up being a “break and retest” pattern.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price is consolidating at the support zone where we can also find the confluence of the trendline and the 50% Fibonacci retracement level. This is where the buyers are stepping in with a defined risk below the trendline to position for a rally into the 0.6870 high. The sellers, on the other hand, will want to see the price breaking lower to regain control and push the pair into the 0.6579 level.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the recent price action has been mostly rangebound as the market awaits new catalysts to push it in either direction. From a risk management perspective, the best spot for the buyers to go long would be right at the support zone as they will have a defined risk just below the trendline and a great risk to reward setup to target the 0.6870 high. The sellers should wait for a break below the trendline before considering new short positions.
Upcoming Catalysts
This week is basically empty on the data front with the only highlights being the Australian and US PMIs on Thursday.