Analysis of AUDUSD Technical Trends on Forexlive Sparks Interest

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no change to the statement.
• Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
• The recent US CPI missed expectations across the board bringing the expectations for rate cuts forward.
• The labour market is starting to show weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board. Last week though, the US Jobless Claims beat forecasts by a big margin, although volatility in the data is normal.
• The latest US PMIs came basically in line with expectations with a miss in the Manufacturing index and a beat in the Services measure.
• The recent Fedspeak has been leaning on the hawkish side, but the recent data suggest that the Fed is likely done for the cycle.
• The market doesn’t expect the Fed to hike anymore.

AUD

• The RBA raised the cash rate by 25 bps as expected as the central bank judged that the move was warranted to be more assured that inflation would return to target in a reasonable timeframe.
• The CPI report recently surprised to the upside prompting the market to price in a higher chance of another rate hike from the RBA in November, which is what we eventually got.
• The RBA Governor Bullock has been leaning on a more hawkish side recently, but the central bank remains optimistic on the future outlook.
• The labour market continues to weaken as seen also recently with the bulk of jobs added being part-time.
• The wage price index surprised to the upside as wage growth in Australia remains strong.
• The recent Australian PMIs fell further into contraction for both the Manufacturing and Services sectors.
• The RBA Meeting Minutes released last week were more hawkish than expected and showed that the central bank is now more worried about inflation expectations getting out of hand.
• The market expects the RBA to hold rates steady at the next meeting.

AUDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that AUDUSD is getting closer to the key trendline around the 0.6660 level where we can also find the 61.8% Fibonacci retracement level for confluence. We can expect the sellers to step in around the trendline more aggressively with a defined risk above it to position for a drop back into the support zone at 0.65 and upon a further break, target new lows.

AUDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price has been diverging with the MACD for quite some time right as it approaches the key trendline. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another confirmation for the sellers that we could see at least a deeper pullback soon. More conservative sellers might want to wait for the price to break the rising wedge pattern to the downside before piling in and target the support at 0.65.

AUDUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the price bounced on the bottom trendline as the buyers stepped in to position for a rally into the key trendline. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bearish setup and position for a drop into the support zone.

Upcoming Events

Today, we will get the latest US Consumer Confidence report and it will be interesting to see how the US consumers see the labour market. Tomorrow, we will see the Australian Monthly CPI report which is going to be important for the RBA given the recent hawkish stance. On Thursday, we will see the US PCE and US Jobless Claims data with the market likely focusing more on the latter given that we already saw the latest inflation data with the US CPI report just two weeks ago. Finally, on Friday, we conclude the week with the US ISM Manufacturing PMI which missed expectations by a big margin the last time.