USD

  • The Fed left interest rates unchanged as expected at the last meeting and dropped the tightening bias in the statement.
  • The US CPI and the US PPI beat expectations for the second consecutive month.
  • The NFP report beat expectations on the headline number, but the unemployment rate and the average hourly earnings missed notably. Moreover, the US Jobless Claims yesterday beat expectations across the board with a big positive revision to Continuing Claims.
  • The latest US ISM Manufacturing PMI missed expectations by a big margin remaining in contraction with the US ISM Services PMI following suit but holding on in expansion.
  • The US Retail Sales missed expectations across the board although the data improved from the prior month.
  • The market 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 last 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 showed the Manufacturing PMI falling back into contraction while the Services PMI jumped back into expansion.
  • The market expects the first rate cut in August.

AUDUSD Technical Analysis – Daily Timeframe

AUDUSD Technical Analysis
AUDUSD Daily

On the daily chart, we can see that AUDUSD recently probed above the key resistance level at 0.6623 but got smacked back down following strong US data releases. The price is now testing the red 21 moving average where we can expect the buyers to step in to position for a rally back into the highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the key support zone targeting a break below it.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that the price broke through the support zone around the 0.6590 level where we had the confluence of the previous swing high level, the 38.2% Fibonacci retracement level and the daily 8 moving average. The sellers piled in aggressively on a break below the support zone to target the 0.65 handle. The price is now a bit overstretched as depicted from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move. In this case, it might end up being a break and retest pattern with the sellers increasing the bearish bets at the support turned resistance.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see that we now have a strong resistance around the 0.6585 level where we can also find the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop into the 0.65 handle. The buyers, on the other hand, will want to see the price breaking higher to pile in and position for a rally into the highs.

Upcoming Events

Today we conclude the week with the US Industrial Production data and the University of Michigan Consumer Sentiment survey.