The Fed is waiting for the totality of the data to be released before deciding what to do at their September meeting. As of now, the data supports the soft-landing narrative as the disinflation in the core measures continues but the strength in the labour market and consumer spending might keep inflation higher for longer. This is something that might translate into more rate hikes or a “higher for longer-er” stance. Recently the long-term Treasury yields have been rising non-stop and this has benefited the US Dollar but the reason for such a rally is still unclear.
The RBA, on the other hand, kept its cash rate unchanged with a slight tweak to a line in the policy statement that suggests that they are leaning more on the dovish side. This week the RBA Minutes showed that the central bank indeed prefers to keep the cash rate steady. The data is supporting the RBA’s stance as the Australian jobs, wages and inflation data all missed expectations.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD eventually broke below the 0.6459 low and extended the selloff towards the 0.6360 level. This breakout opened the door for a fall into the 2022 low at 0.6168. At the moment we might be a bit oversold but sometimes when the market is worried about something the oversold condition can go on for hundreds of pips, so this shouldn’t be a reason to buy on its own.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we’ve been diverging with the MACD for a while and this is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, a good level would be the support turned resistance around 0.6459 where we have also the trendline and the 38.2% Fibonacci retracement level. This is where the sellers are likely to pile in with a defined risk above the trendline and target the 0.6168 level. The buyers, on the other hand, will need the price to break above the trendline to have the conviction to target the 0.6781 resistance.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have another minor trendline that the price has been respecting for some time. In fact, we should see the sellers leaning on it again to target new lower lows, but if the price breaks through it, then we can expect the pullback into the previously mentioned resistance. The buyers, on the other hand, are likely to enter at every break higher.
