USD
- The Fed left interest rates unchanged as expected while dropping the tightening bias in the statement but adding a slight pushback against a March rate cut.
- Fed Chair Powell stressed that they want to see more evidence of inflation falling back to target and that a rate cut in March is not their base case.
- The latest US GDP beat expectations by a big margin.
- The US PCE came mostly in line with expectations with the Core 3-month and 6-month annualised rates falling below the Fed’s 2% target.
- The US Job Openings surprised to the upside although the hiring and quit rates remain below pre-pandemic levels. The US Jobless Claims, on the other hand, missed expectations for the second consecutive week although they remain near the cycle lows.
- The ISM Manufacturing PMI surprised to the upside with the new orders index, which is considered a leading indicator, jumping back into expansion.
- The US Retail Sales beat expectations across the board.
- The US Consumer Confidence report came in line with expectations, but the labour market details improved considerably.
- The market now expects the first rate cut in May.
AUD
- The RBA left interest rates unchanged as expected at the last meeting with the central bank maintaining the usual data dependent language.
- The recent quarterly inflation data missed expectations across the board which will give the RBA much more confidence and open the door for rate cuts discussion.
- The latest labour market report missed expectations by a big margin.
- The wage price index surprised to the upside the last time as wage growth in Australia remains strong.
- The latest Australian PMIs improved with the Manufacturing measure bouncing back into expansion while the Services one remains in contraction.
- The market expects the RBA to start cutting rates in June.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD after another brief selloff, bounced back strongly from the key support around the 0.65 level and rallied into the recent highs. The pair has been ranging around these levels for a couple of weeks as the market is now trying to decide where to go next, given that we already priced out the March rate cut for the Fed which was what gave the USD a boost since the start of January.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong resistance zone around the 0.6620 level as the price has been getting rejected multiple times. If the price gets there, we can expect the sellers to step in again with a defined risk above the resistance to position for a drop into the support and target a breakout. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and open the door for a rally into the next resistance at the 0.69 handle.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the V-shaped recovery from the support. We can also notice that we have another strong level around 0.6570 which was the support for the weekly range. From a risk management perspective, the buyers will have a much better risk to reward setup around the 0.6570 level as they will also find the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. The sellers, on the other hand, will want to see the price breaking below the level to invalidate the bullish setup and position for a drop into the 0.65 support.
Upcoming Events
Today we have the US NFP report which is expected at 180K with estimates ranging from a low of 120K to a high of 290K. A number out of the range will cause a strong market reaction.
