Fundamental
Overview
The USD came back with a
vengeance last Friday following the strong US NFP report where the data surprised with solid job
and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.
The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the
bigger picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.
The AUD, on the other hand,
has been supported by a slightly more hawkish RBA and the positive risk
sentiment due to the pickup in global growth. Moreover, the pickup in China’s
economy is generally good news for the Aussie as well as it’s Australia’s
biggest trading partner. If we go back into risk-on sentiment, the greenback
could start to lose ground again.
AUDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that AUDUSD dropped back into the bottom of the recent range around the
0.66 handle where we can also find the 38.2% Fibonacci
retracement level of the entire rally since the end of April.
This is where we can expect
the buyers to step in with a defined risk below the support
to position for a rally into new highs with a better risk to reward setup. The
sellers, on the other hand, will want to see the price breaking lower to gain
even more conviction and target the 0.6464 level next.
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. The US CPI report tomorrow will likely decide where we are
going to go next as hot data should give the USD even more strength and send
the pair lower, while soft figures will likely weaken the greenback leading to
a rally in AUDUSD.
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 0.6630 resistance where they will also find the
38.2% Fibonacci retracement level of the recent drop.
The buyers, on the other
hand, will want to see the price breaking higher to gain even more conviction
and increase the bullish bets into new highs. The red lines define the average
daily range for today.
Upcoming
Catalysts
This week is a bit empty on the data front although we will
have the biggest market moving events tomorrow when we get the US CPI data and
the FOMC rate decision. On Thursday, we have the US PPI and the latest US
Jobless Claims figures. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment survey.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
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