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.
  • The US CPI beat expectations for the third consecutive month, while the US PPI came in line with forecasts.
  • 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.
  • The US Retail Sales beat expectations across the board by a big margin with positive revisions to the prior figures.
  • The market now expects the first rate cut in September.

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 November.

AUDUSD Technical Analysis – Daily Timeframe

AUDUSD Technical Analysis
AUDUSD Daily

On the daily chart, we can see that AUDUSD fell below the 0.6440 low and extended the selloff into the 0.64 handle. The price is a bit overstretched as depicted by the distance 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, the pullback would also coincide with the support now turned resistance and the 38.2% Fibonacci retracement level which will be a nice zone for the sellers to enter the market again with a better risk to reward setup.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that we have a minor trendline defining the current downward momentum with the blue 8 moving average acting as dynamic resistance. We can expect the sellers to lean on this trendline with a defined risk above it to position for further downside. The buyers, on the other hand, will want to see the price breaking higher to position for a rally into the 0.65 resistance zone.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see that the price has been diverging with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, if get a pullback, the sellers should lean on the trendline where they will also find the confluence of the trendline, the Fibonacci retracement levels and the red 21 moving average. If the price were to break higher though, the reversal will be confirmed, and the buyers will pile in for a rally into the 0.65 resistance zone.

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