The Fed members keep on repeating that more rate hikes are coming as the US data continues to surprise to the upside as we have also seen with yesterday’s ADP and ISM Services PMI reports. This has led to a more hawkish pricing for interest rates expectations and boosted the US Dollar.
The RBA kept its cash rate unchanged this week with the usual hawkish comments and the promise of doing more if the data suggests so. They repeated their determination of bringing the inflation rate to target and that they will do what is necessary to achieve that.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD maintains a bearish bias as the US data remains strong. The sellers are targeting the 0.6563 support at the moment, but we should see a break lower and a selloff into the 0.6459 low if the data continues to beat expectations.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that after breaking above the downward trendline, the price rallied to the 38.2% Fibonacci retracement level and the 0.67 handle before falling again into the 0.66 handle. The moving averages have again crossed to the downside, so the bearish momentum resumed and we should expect new lower lows ahead.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price has broke below the support zone at 0.6636 and then pulled back to retest it. This is a pretty good resistance for the sellers as we have the confluence with the 38.2% and 50% Fibonacci retracement levels and the red 21 moving average. The buyers, on the other hand, will need the price to break above this resistance zone to jump onboard and ride the bullish wave into the 0.67 handle.
Upcoming Events
Today we have the US NFP report. The market’s expectation is skewed to the upside given the strong labour market data we got in the past days and weeks, so only a big beat or a miss would be surprising. If we get a big beat, the USD should appreciate across the board as the market will price in a more hawkish path for the Fed. On the other hand, a miss should see the USD under pressure in the short term as the market will price out the current hawkishness.
