Fundamental Overview
The USD regained some ground in the final part of last week although we haven’t got any meaningful catalyst for the move. Overall, we continue to range as the market is waiting for something new for the next sustained trend. Given that the “short US dollar” is now the most crowded trade, it will take something meaningful to lead the market to expect more rate cuts than currently priced in.
On the AUD side, the focus this week will be on the Australian quarterly inflation report due on Wednesday. The market is currently pricing 58 bps of easing by year end with an 85% chance of a rate cut at the upcoming meeting in August. We will likely need much lower than expected figures to make the market to price in more rate cuts than currently seen. Higher than expected data could give the AUD a boost in the short term on a more hawkish repricing.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD rejected the top trendline once again as the sellers stepped in to position for a drop into the 0.6350 support. The buyers will need to break above the top trendline to extend the rally into the 0.6900 handle next.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor support zone around the 0.6485 level where the price got rejected from several times in the past weeks. If the price gets there, we can expect the buyers to step in with a defined risk below it to position for a rally back into the top trendline. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 0.6350 support next.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor downward trendline defining the bearish momentum on this timeframe. From a risk management perspective, the sellers will have a better risk to reward setup around the trendline to position for further downside. The buyers, on the other hand, will look for a break higher to invalidate the bearish setup and pile in for a rally back into the top trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the get US Job Openings and Consumer Confidence data. On Wednesday, we have the Australian Quarterly Inflation report, the US ADP, the US Q2 GDP and the FOMC rate decision. On Thursday, we get the US PCE price index, the US Jobless Claims and the US Employment Cost Index. Finally, on Friday, we conclude the week with the US NFP report and the US ISM Manufacturing PMI.
