Fundamental
Overview
The USD got boosted once
again by negative tariffs news yesterday as Bessent talked about universal tariffs starting at 2.5% and gradually
increasing by the same amount every month, which eventually could reach 20%.
Trump later doubled down on that saying that he wants tariffs much bigger than
2.5%.
The tariffs risk has been
the only thing keeping a bid under the US Dollar after the US inflation data
marked the top in the repricing of rate cuts expectations. So, when this risk
eases, the greenback weakens and vice versa. Today, we have the FOMC decision
where the central bank is expected to keep rates steady. If Fed Chair Powell
sounds more dovish, we could see the greenback weakening again.
On the AUD side, the Australian Q4 CPI report today missed expectations
across the board with the underlying inflation figures easing further and now
comfortably in the RBA’s target range on a 6-month annualised basis.
As a reminder, the RBA softened
further its stance
at the last policy decision as it nears the first rate cut. The market is now seeing
a 75% chance of a 25 bps cut in February with a total of 85 bps of easing
expected by year end.
AUDUSD
Technical Analysis – Daily Timeframe
AUDUSD Daily
On the daily chart, we can
see that AUDUSD failed to sustain the break above the 0.63 handle. The sellers
piled in for a drop into the lows where we can expect the buyers to step in
again to position for a rally into new highs.
AUDUSD Technical
Analysis – 4 hour Timeframe
AUDUSD 4 hour
On the 4 hour chart, we can
see that we have an upward trendline defining the bullish momentum. If
we get a pullback into it, we can expect the buyers to lean on the trendline to
position for the break above the resistance. 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 1 hour
On the 1 hour chart, we can
see that we have a downward trendline defining the current pullback. The
sellers will likely continue to lean on it to keep pushing into new lows, while
the buyers will look for a break higher to target a break above the resistance.
The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have the FOMC Policy Decision.
Tomorrow, we get the US Q4 GDP report and the latest US Jobless Claims figures.
On Friday, we conclude the week with the US PCE and the US Employment Cost
Index.