The USD weakened
across the board recently due to a more dovish than expected FOMC decision last
week where the Fed decided to signal a bigger QT taper beginning in June and
the Fed Chair Powell pushing back repeatedly against rate hike expectations.
Moreover, the data on Friday showed that the Fed might indeed just keep rates
higher for longer as job and wage growth soften.
The AUD, on the
other hand, has been gaining ground against many major currencies following the
latest Australian Q1
CPI report where the
data beat expectations by a big margin pushing rate cuts expectations further
away to Q2 2025 and raising the chances of a rate hike. The RBA today disappointed
the hawks as it didn’t add any hawkish language in the statement
and the RBA’s
Governor Bullock sounded pretty neutral despite repeating the same old message
that they are “not ruling anything in or out”.
AUDUSD
Technical Analysis – Daily Timeframe
AUDUSD Daily
On the daily
chart, we can see that the key resistance
around the 0.6650 level held once again as the RBA disappointed the hawks. We
might need a downside surprise in the US CPI report next week to see the AUDUSD
pair breaking to the upside and extending the rally into new highs. For now, we
remain in kind of a limbo where central banks keep rates higher for longer leading
to big ranges across pairs with short term moves inside the ranges triggered by
the repricing in expectations.
AUDUSD Technical Analysis
– 1 hour Timeframe
AUDUSD 1 hour
On the 1 hour
chart, we can see that the price broke below the trendline
and it’s now near the 0.6577 level as the sellers regained some short term
control. If we extend into the 0.6577 level, we can expect the buyers to step
in with a defined risk below the level and position for a rally back into the
key resistance zone. The sellers, on the other hand, will want to see a clear
break to the downside to pile in more aggressively and extend the drop into the
0.6464 swing low.
Upcoming
Catalysts
This week is pretty empty on the data front with just the US
Jobless Claims on Thursday and the University of Michigan Consumer Sentiment
survey on Friday being the only notable releases left. It’s unlikely that they
will change the market’s expectations that much though, so the price action
might remain tentative heading into the US CPI next week, although the bias might
remain generally bullish because of the risk-on sentiment.