Fundamental Overview
The USD weakened across the
board last week 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. Nevertheless, the USD has been in the driving seat this
week despite the lack of economic data or major changes in the fundamentals.
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 yesterday 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
On the daily
chart, we can see that AUDUSD couldn’t break above the key resistance
zone around the 0.6650 level as the RBA disappointed the buyers and the USD weakness
faded across the board. We will likely need a soft US CPI report next week to
push the price beyond the resistance. There’s not much to work with this week,
so the technicals might remain in the driving seat.
AUDUSD
Technical Analysis – 1 hour Timeframe
On the 1 hour
chart, we can see that from a risk management perspective, the sellers will
have a better risk to reward setup around the 0.6577 level where we can find
the confluence
of the trendline
and the 38.2% Fibonacci
retracement level. The buyers, on the other hand, will want to see the price
breaking to the upside to invalidate the bearish setup and position for a rally
back into the 0.6650 resistance.
Upcoming
Catalysts
Tomorrow we get the latest US Jobless Claims figures while on
Friday we conclude the week with the University of Michigan consumer sentiment
survey. It’s unlikely that we will see major changes to the market’s
expectations though, and the next big event to watch will be the US CPI next
week.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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