Basic Overview
The US dollar started the week on a weaker note as the new month began. Last week’s strength may have been driven more by end-of-quarter flows than anything fundamental as economic data did not change interest rate expectations. However, the data should continue to support risk appetite amid a recovery in growth without inflationary pressures.
On the other hand, the Australian dollar should be preferred in such an environment because it is also supported by the slightly more hawkish Reserve Bank of Australia. Last week, the Australian dollar got a boost from another hot monthly CPI report that increased the chances of a rate hike, although Reserve Bank of Australia Chairman Hauser poured some cold water on the outlook as he favors keeping interest rates steady for longer.
AUD/USD Technical Analysis – Daily Time Frame
AUD/USD daily
On the daily chart, we can see that the AUD/USD is approaching the key resistance area around 0.6713. All else being equal, the fundamentals are in place for an upside breakout. This is what buyers will want to see to increase bullish bets to 0.6870 after that.
On the other hand, sellers are likely to intervene around the 0.6713 resistance area with a specific risk above it to prepare for a drop back to the bottom of the range at 0.66.
AUDUSD Technical Analysis – 4-hour timeframe
AUDUSD 4 hours
On the 4-hour chart, we can see more clearly the price action in a limited range between resistance 0.67 and support 0.66. These will be the key levels that the market will need to break to start a more sustainable trend. For now, we can continue to bounce until we get a clear breakout.
Technical analysis of the AUD/USD pair – 1 hour time frame
Technical analysis of the Australian dollar against the dollar
On the 1-hour chart, we can see that the recent price action has formed another minor band between the 0.6625 support level and the 0.6680 resistance level. From a risk management perspective, buyers will certainly have a better risk-reward setup around support levels, while sellers will want to rely on resistance levels.
However, if the price stays above the resistance level of 0.6680, buyers are expected to remain in control and extend the rally to the resistance level of 0.6713. The red lines mark the average daily range for the day.
Upcoming stimuli
This week is full of important events. Today we start with the release of the US ISM Manufacturing PMI. Tomorrow, we have US jobs and Fed Chair Powell’s speech. On Wednesday, we will get US ADP, US Unemployment Claims, US ISM Services PMI and FOMC Minutes. Thursday will be a holiday in the United States for Independence Day. Finally, on Friday, we close out the week with the US Nonfarm Payrolls report.