USD

  • The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
  • Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
  • The US CPI beat expectations for the second consecutive month with the disinflationary trend reversing.
  • The US PPI beat expectations across the board by a big margin.
  • The US Initial Claims beat expectations while Continuing Claims missed. Overall, the data remains steady.
  • The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion. Similarly, the ISM Services PMI beat expectations across the board with the employment sub-index erasing the prior drop and prices paid jumping above 60.
  • The US Retail Sales missed expectations across the board by a big margin.
  • The market now expects the first rate cut in June.

AUD

  • The RBA left interest rates unchanged as expected with the central bank maintaining the usual tightening bias and data dependent language.
  • The recent Monthly CPI report missed expectations across the board which was a welcome development for the RBA.
  • The latest labour market report missed expectations by a big margin.
  • The wage price index surprised to the upside as wage growth in Australia remains strong.
  • The latest Australian PMIs improved with the Manufacturing measure bouncing back into expansion while the Services one remains in contraction.
  • The market expects the first rate cut in June.

AUDUSD Technical Analysis – Daily Timeframe

AUDUSD Technical Analysis
AUDUSD Daily

On the daily chart, we can see that AUDUSD broke above a key resistance level where we had also the red 21 moving average for confluence. The buyers will now start targeting the next resistance at 0.6623. The sellers, on the other hand, will want to see the price falling back below the 0.6542 level to leave behind a fakeout and position for a drop into new lows.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that the price has been diverging with the MACD for quite a while. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a pullback into the 0.6542 level but given today’s breakout, we might be in front of a reversal. We can see that the buyers kept on leaning on the red 21 moving average and if we get a pullback we can expect them to lean on it again.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see that we have an upward trendline defining the current bullish trend. We can see that we got a breakout in the APAC session, but the price reversed quickly and extended the rally to new highs. We can also notice that the latest leg higher diverged with the MACD which might be another bearish confluence for the sellers, but they will need the price to break below the trendline to confirm an eventual downtrend.

Upcoming Events

This week is basically empty on the data front with just the release of the Australian Wage data and the FOMC Meeting Minutes tomorrow followed by the Australian and the US PMIs, and the US Jobless Claims on Thursday.