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 Jobless Claims yesterday missed expectations slightly although Continuing Claims improved.
  • 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 Consumer Confidence missed expectations although the labour market details improved.
  • The market still expects the first cut in June, but the probability stands at just 60%.

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 eventually bounced around the key 0.65 support zone and rallied all the way back to the key resistance at 0.6623. The sellers stepped in 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 start targeting the next resistance around 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 as soon as the price broke out of the falling channel, the buyers piled in strongly supported by the disappointing US ISM Services PMI and pushed the price back into the resistance. We now have a strong support zone around the 0.6560 level where we can find the confluence of the previous swing high level, the red 21 moving average and the 38.2% Fibonacci retracement level. This is where the buyers stepped in with a defined risk below the support to position for a rally into the resistance targeting a breakout. 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 more closely the recent price action with the bounce today on the support zone. We now have some resistance around the 0.6590 level where we can find the confluence of the red 21 moving average and the 50% Fibonacci retracement level. This is where the sellers might step in with a defined risk above the Fibonacci level to position for a break below the 0.6560 support with a better risk to reward setup. A lot will depend on the US NFP report today as strong data across the board will likely trigger a strong selloff in the pair.

Upcoming Events

Today we conclude the week with the US NFP report.