USD

  • The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement.
  • Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
  • The latest US Core PCE came in line with forecasts with the disinflationary progress continuing steady.
  • The labour market has been showing signs of weakening lately but last week we got some strong releases with the US Jobless Claims and the NFP coming in strongly.
  • The latest ISM Manufacturing PMI missed expectations falling further into contraction, while the ISM Services PMI beat forecasts holding on in expansion.
  • The University of Michigan Consumer Sentiment survey came in much better than expected with inflation expectations tumbling.
  • The hawkish Fed members recently shifted their stance to a more neutral position.
  • The market expects the Fed to start cutting rates in Q2 2024.

AUD

  • The RBA left interest rates unchanged as expected at the last meeting with the central bank maintaining the usual data dependent language.
  • The recent Monthly CPI report missed expectations across the board which is a welcome development for the RBA.
  • The RBA Governor Bullock has been leaning on a more hawkish side recently, although she remains optimistic on the future outlook.
  • The labour market continues to weaken as seen also recently with the bulk of jobs added being part-time.
  • The wage price index surprised to the upside as wage growth in Australia remains strong.
  • The recent Australian PMIs fell further into contraction for both the Manufacturing and Services sectors.
  • The market expects the RBA to start cutting rates in Q4 2024.

AUDUSD Technical Analysis – Daily Timeframe

AUDUSD Technical Analysis
AUDUSD Daily

On the daily chart, we can see that AUDUSD bounced near the key support zone around the 0.65 handle where we had also the confluence with the red 21 moving average. The buyers stepped in with a defined risk below the support to position for a rally into the major trendline and target a break higher. The sellers, on the other hand, might want to wait for the price to come into the trendline again before entering the market with more conviction.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that the price action recently has been rangebound as the market probably awaits this week’s key economic events before taking a direction. At the moment, there’s no clear level where to lean onto except the trendline and the support at 0.65.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see that we have an interesting zone around the 0.6595 level where the price has been reacting to for several times. We might look at it as kind of a barometer for the market sentiment. If the price stays above it, the buyers will be in control, and we will likely see a rally into the trendline. Conversely, if the price stays below it, the sellers will look for a drop back into the support zone targeting a break lower.

Upcoming Events

This week is going to be a big one with the US CPI and the FOMC rate decision on the agenda. We begin today with the release of the US CPI report where the market will want to see how the disinflationary trend is going. Tomorrow, we have the US PPI data followed by the FOMC rate decision where the Fed is expected to keep interest rates unchanged. On Thursday, we have the Australian Labour Market report, while later in the day will see the US Retail Sales and Jobless Claims figures. On Friday, we conclude the week with the Australian and the US PMIs.