Fundamental
Overview
The USD continues to
consolidate around the highs except against the commodity currencies where it’s
been having the upper hand. The US inflation data last week was once again a
disappointment although the data that feeds into the Core PCE was overall benign
as forecasters expect a 0.13% M/M increase.
Nonetheless, the Treasury yields continue to climb and are now back around the
post-US election highs. There’s some understandable uneasiness in the bond
market given the hot US data and the Fed continuing to cut into an accelerating
economy.
On the AUD side, the RBA kept the cash rate unchanged at the last
policy decision but toned down further its language as we slowly move towards
the first rate cut in 2025. The Australian labour market report recently came out much better than
expected which decreased the probabilities for the first cut in February to
64%. The first cut is fully priced in for April.
AUDUSD
Technical Analysis – Daily Timeframe
AUDUSD Daily
On the daily chart, we can
see that AUDUSD is challenging the 2024 lows around the 0.6340 level. The
sellers will likely keep on piling in around these levels to extend the drop
into the 0.6267 level next. The buyers, on the other hand, will need a break
above the trendline
to regain control and start targeting the 0.65 handle next.
AUDUSD Technical
Analysis – 4 hour Timeframe
AUDUSD 4 hour
On the 4 hour chart, we can
see that from a risk management perspective, the sellers will have a better
risk to reward setup around the major trendline. The buyers, on the other hand,
will likely step in around the 2024 lows to position for a pullback into the
trendline and target a break above it.
AUDUSD Technical
Analysis – 1 hour Timeframe
AUDUSD 1 hour
On the 1 hour chart, we can
see that we have a minor resistance zone around the 0.6380 level where the
price got rejected from several times in the past days. The sellers will likely
lean on that resistance to position for new lows, while the buyers will look
for a break higher to increase the bullish bets into the major trendline. The
red lines define the average daily range for today.
Upcoming
Catalysts
Today, we get the US Retail Sales data. Tomorrow, we have the FOMC Policy
Decision. On Thursday, we get the latest US Jobless Claims figures. On Friday,
we conclude the week with the US PCE data.
