Fundamental
Overview
The USD last week saw a
quick dip across the board following the soft US CPI report as the market priced back in two rate
cuts by the end of the year. The moves were reversed soon after though as we
got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for
this year despite the soft US CPI report.
Later on, Fed Chair Powell backpedalled on the projections making them a
bit less worrying as the central bank remains very data dependent. The US
Dollar eventually got supported in the last part of the last week as the risk
sentiment turned more cautious.
The AUD, on the other hand,
got pressured mainly because of the risk-off sentiment and the US Dollar
strength. This week, the RBA
left the Cash Rate unchanged and kept a slightly hawkish stance. The central
bank decision coupled with a better risk sentiment gave the Aussie a boost.
AUDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that AUDUSD bounced from the key support
zone around the 0.66 handle and extended the rally following the slightly hawkish
RBA decision and the good US
Retail Sales report.
The natural target for the
buyers is the resistance around the 0.6712 level. That’s where we can expect
the sellers to step in with a defined risk above the resistance to position for
a drop back into the bottom of the range.
AUDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the rangebound price action between the 0.67 resistance and
the 0.66 support. These will be the key levels that the market will likely need
to break to start a more sustained trend. For now, will could keep bouncing
around until we get a clear breakout.
AUDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that the price bottomed around the support and once it broke above the trendline
the bearish momentum started to wane. Eventually, the break above the 0.6620
level gave the buyers enough conviction to pile in more aggressively and extend
the rally towards the top of the range.
If we get a pullback, the
buyers might lean on the trendline and the 50% Fibonacci
retracement level around the 0.6640 level. The sellers, on the other hand, will
have a better risk to reward setup around the 0.67 resistance, but if the price
breaks below the trendline, the bearish momentum might increase and see the
sellers piling in to target a breakout to the downside. The red lines define
the average daily range for today.
Upcoming
Catalysts
Tomorrow we have the US Housing Starts, Building Permits and the US Jobless
Claims figures. On Friday, we conclude the week with the Australian and the US
PMIs.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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