The US dollar weakened across the board last week due to a more pessimistic-than-expected FOMC decision, as the Fed decided to signal a further tapering of the QT period starting in June, and Fed Chair Powell also repeatedly backtracked on interest rate hike expectations. . Furthermore, data released on Friday showed that the Fed may keep interest rates higher for longer as job and wage growth declines.
The Australian dollar rose against several major currencies following the latest Australian CPI report for the first quarter where the data beat expectations by a large margin, pushing interest rate cut expectations further into the second quarter of 2025 and increasing the chances of a rate hike.
Technical Analysis of AUDUSD – Daily Time Frame
AUD/USD 1 hour
On the daily chart, we can see that the price has now reached a major resistance area around the 0.6650 level as the pair has been rejected several times in the past few months. This is where we can expect sellers to step in with specific risks above the resistance level and position themselves to fall to new lows. On the other hand, buyers will want to see the price break to the upside to accumulate with more conviction and start targeting the cycle highs.
Technical Analysis of AUDUSD – 1 Hour Time Frame
AUD/USD 1 hour
On the 1-hour chart, we can see that we have a trend line outlining the current uptrend on this time frame with a minor support area around the 0.66 handle. If we get a pullback to the trend line, we can expect buyers to rely on it to take a hawkish decision from RBI and target a breakout above the resistance area. Sellers, on the other hand, will want to see the price break down to start accumulating and increase bearish bets in case the RBA disappoints. A break below 0.6577 would technically reverse the trend and open up room for a drop to the swing low at 0.6465.
Upcoming stimuli
This week is very data-free, with tomorrow's RBA decision, Thursday's US unemployment claims and Friday's University of Michigan Consumer Sentiment survey the only notable releases. We may see some risk-on sentiment this week after US data on Friday, so even if the RBA disappoints, the US dollar may remain under pressure.
