USD

  • The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement. The Dot Plot still showed three rate cuts for 2024 and the economic projections were upgraded with growth and inflation higher and the unemployment rate lower.
  • Fed Chair Powell maintained a neutral stance as he said that it was premature to react to the recent inflation data given possible bumps on the way to their 2% target.
  • The US CPI and the US PPI beat expectations for the second consecutive month.
  • The US NFP beat expectations across the board although the average hourly earnings came in line with forecasts.
  • The US ISM Manufacturing PMI beat expectations by a big margin with the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to the lowest level in 4 years.
  • There’s now basically a 50/50 chance of a rate cut in June.

AUD

  • The RBA left interest rates unchanged as expected at the last meeting and finally dropped the tightening bias.
  • The last Monthly CPI report came in line with expectations although the underlying inflation measure increased from the prior month.
  • 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 further into contraction while the Services PMI continue to increase and remain in 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 rallied back into the key 0.6623 resistance following the goldilocks US NFP report. We can expect the sellers to step in around these levels again with a defined risk above the resistance to position for a drop into the lows. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.69 handle.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that the price recently bounced on the 0.6560 support zone where we had also the 50% Fibonacci retracement level and the red 21 moving average for confluence. If the price goes back there, we can expect the buyers to step in with a defined risk below the support to position for a break above the resistance level with a better risk to reward setup. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into new lows.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see that we have a strong support zone around the 0.6590 level where we can find the confluence of the previous swing level, the trendline and the 38.2% Fibonacci retracement level. This is the first support the buyers might want to use to position for a break above the resistance level. The sellers, on the other hand, will look for a break to the downside to increase the bearish bets into the 0.6560 support.

Upcoming Events

Tomorrow we get the US CPI report and the FOMC Minutes. On Thursday, we will have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment Survey.