FUNDAMENTAL OVERVIEW
USD:
The US Dollar sold off across the board on Friday following rumours of the NY Fed conducting rate checks on the USD/JPY pair. The market took that as a signal of a potential intervention to strengthen the Japanese Yen and the unwinding of positions weighed on the greenback.
This wasn’t a fundamental-driven move but a “technical” one. In general, such reactions are eventually faded in the following days. The problem for the dollar is that there’s no strong reason for it to appreciate yet.
This week, we have the FOMC decision on Wednesday where the central bank is expected to keep interest rates unchanged and maintain a data-dependent approach for the next rate cuts. There shouldn’t be any surprise at this meeting. February might be key for the US Dollar as we get another set of economic data, with the NFP report likely being pivotal for the market pricing.
In fact, we’ve been seeing notable improvements in the US Jobless Claims data that could point to a re-acceleration in the labour market. The market is still pricing 48 bps of easing by year-end. Those bets are likely to be pared back in case the data strengthens and should provide support for the greenback.
AUD:
On the AUD side, the currency surged following the blockbuster Australian jobs report last week that triggered a hawkish repricing in interest rates expectations with traders now expecting a rate hike already at the upcoming RBA meeting (63% probability).
As a reminder, the RBA at the last policy decision sounded more hawkish following a series of higher-than-expected inflation reports. The central bank also discussed whether a rate hike might be needed at some point in 2026.
This week we have the Australia’s quarterly inflation report. We will likely need very soft data to bring the February rate hike probabilities below 50%. Another hot report is going to seal the rate hike.
AUDUSD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that AUDUSD finally reached the 0.69 handle with the price now trading a bit above it. We are now at a very strong resistance zone that capped the upside since 2023. We can expect the sellers to step in around these levels with a defined risk above the resistance to position for a pullback into the trendline. The buyers, on the other hand, will look for a breakout to increase the bullish bets into new highs.
AUDUSD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that we have an upward trendline defining the bullish momentum on this timeframe. If we get a pullback, we can expect the buyers to lean on the trendline with a defined risk below it to position for a rally into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the major trendline.
AUDUSD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see that we have another minor trendline defining the bullish momentum on this timeframe. The buyers will likely continue to lean on the trendline to keep pushing into new highs, while the sellers will look for a break lower to extend the pullback into the next trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Tomorrow we have the weekly US ADP jobs data and the US Consumer Confidence report. On Wednesday, we have the Australian quarterly CPI report and the FOMC policy announcement. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US PPI report.
