Fundamental
Overview
The USD has been rallying
steadily against the major currencies since last Wednesday, although it’s
unclear what has been behind the move. From the monetary policy perspective,
nothing has changed as the market continues to expect at least two rate cuts by
the end of the year and sees some chances of a back-to-back cut in November.
The data continues to
suggest that the US economy remains resilient with inflation slowly falling
back to target. Overall, this should continue to support the soft-landing
narrative and be positive for risk sentiment. The new driver could be Trump now
looking more and more like a potential winner and his policies are seen as
inflationary which could see the Fed eventually going even more slowly on rate
cuts.
The AUD, on the other hand,
has been supported on the back of a hawkish RBA given the sticky inflation and
the positive risk sentiment, although that strength has waned in the recent weeks. The next
key event for the Australian Dollar will be the Australian Q2 CPI report next week.
AUDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that AUDUSD dropped all the way back to the key support zone around the 0.66 handle. This is where we
can expect the buyers to step in with a defined risk below the support to
position for a rally into the 0.6713 resistance. The sellers, on the other
hand, will want to see the price breaking lower to increase the bearish bets into
the 0.65 handle next.
AUDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a downward trendline
defining the current bearish momentum. The buyers will want to see the price
breaking above the trendline to gain some more confidence on further upside and
increase the bullish bets into the resistance.
AUDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see more clearly the trendline. If we get a bounce from the support zone, the
sellers will likely lean on the trendline to position for a break below the support
with a better risk to reward setup. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we have the US Flash PMIs. Tomorrow, we will get the latest US Jobless
Claims figures. Finally, on Friday we conclude the week with the US PCE report.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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