Basic Overview
The US dollar fell broadly last Friday after the release of the weak US non-farm payrolls report. The data showed further slowdown in the labor market with the unemployment rate rising and wage growth declining. Basically we have an economy that is slowing but still growing.
We will see if the market will be able to maintain the positive sentiment in hopes of a soft landing or start worrying about a recession. Yesterday, Fed Chairman Jerome Powell testified before Congress but did not offer anything in terms of future guidance as they want to see more data before signaling any action.
On the other hand, the Australian dollar gained last week against the US dollar on risk sentiment as US data continued to support at least two rate cuts by the Federal Reserve but did not send recession signals. This week, we are witnessing a consolidation as the market awaits tomorrow’s US CPI and unemployment claims figures.
On the monetary policy front, the Australian dollar got a boost from last month’s hot monthly consumer price report which raised the chances of a rate hike, although RBA Governor Hauser poured some cold water on expectations when he said he would prefer to keep rates on hold for longer.
AUDUSD Technical Analysis – Daily Time Frame
AUDUSD Daily Currency Pair
On the daily chart, we can see that the AUD/USD pair broke out of the two-month range last week and has been holding above it ever since. Now the resistance at 0.6713 has become support.
Here we can expect buyers to continue piling up money with risks set below in preparation for a rally to 0.6870. On the other hand, sellers will want to see the price break back below 0.6713 to regain some control and prepare themselves for a drop to 0.66.
AUDUSD Technical Analysis – 4-hour timeframe
AUDUSD 4 hours
On the 4-hour chart, we can more clearly see consolidation above the 0.6713 level as the market awaits tomorrow’s key economic data with the US CPI and jobless claims numbers. For now, we are likely to continue to range-travel here until we get a breakout on either side.
AUDUSD Technical Analysis – 1-Hour Timeframe
AUDUSD 1 hour
On the 1-hour chart, we can see that we now have a good resistance area around the 0.6750 level. Buyers will want to see the price rise to increase bullish bets to new highs, while sellers are likely to continue relying on the resistance to place a position for a break of the 0.6713 level. The red lines mark the average daily range for today.
Upcoming incentives
Tomorrow will be the most important day of the week as we get the US CPI and US jobless claims numbers. On Friday, we close out the week with the US PPI and the University of Michigan Consumer Sentiment Survey.
