Fundamental Overview
The dollar recently got a boost from another hot data set, as US job creation surprised to the upside and the ISM Services PMI index jumped to its highest level since 2023.
Market prices were little changed, however, and the Fed’s Waller yesterday kept hopes of a rate cut on hold, saying the pace would be driven by the progress of inflation. With the central bank’s focus back on inflation, next week’s US CPI report should have a bigger impact on interest rate expectations than tomorrow’s US NFP (barring large deviations).
On the AUD side, the RBA further eased its stance on its latest policy decision as it approaches its first interest rate cut. The market sees a 57% chance of a 25 basis point cut in February, although the first cut is fully seen in April.
Australia’s monthly CPI showed a softening in core inflation yesterday, with the annualized mean CPI at 3.2%. RBA’s target inflation range is 2-3%.
AUDUSD Technical Analysis – Daily Time Frame
AUDUSD per day
On the daily chart, we can see that AUDUSD is bouncing off the 2022 lows. This is where buyers enter with defined risk below the low to position themselves for a rally back to the 0.69 handle. Sellers, on the other hand, will want to see the price fall in order to increase bearish bets to new lows.
AUDUSD Technical Analysis – 4 Hour Time Frame
AUDUSD 4 hours
On the 4-hour chart, we can see that from a risk management perspective, sellers will have a better risk to reward setup around the major trend line and resistance at 0.6270. Buyers, on the other hand, will want to see the price break above that zone to gain even more conviction and increase bullish bets to new highs.
AUDUSD Technical Analysis – 1 Hour Time Frame
AUDUSD 1 hour
On the hourly chart, we can see that we have a small descending trend line that defines the current bearish momentum on this time frame. Sellers will likely continue to rely on it to position themselves for a break below the low, while buyers will look for a break higher to increase bullish bets on the 0.6270 resistance. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we close the week with the US NFP report.