AUDUSD Technical Analysis | Forexlive

The recent beat in the non-farm payrolls (NFP) data, coupled with concerning
factors such as a higher unemployment rate and reduced average weekly hours,
has resulted in a depreciation of the USD. The market has begun to readjust its
previously hawkish outlook to a less hawkish one, as a looser labour market has
the potential to bring the inflation rate even lower. Additionally, the miss in
the ISM Services PMI, particularly in the lower prices
paid sub-index, has made some to speculate that core inflation could start to
normalise in the near future.

Regarding the big miss in US jobless claims last week, the market took it with
a pinch of salt, considering the influence of seasonal adjustments. On a
positive note, continuing claims improved even further, indicating that workers
can find new employment relatively quickly after getting unemployed. Overall,
the significant shift towards a hawkish stance seen in May, driven by the hot
economic data, has recently begun to reverse. This reversal can be attributed
to the expressed preference of Federal Reserve members to skip the June rate
hike and the recent disappointing economic data.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see the huge rally in
the AUDUSD pair soon after the failed breakout of the 0.6563 support level.
The price has now come all the way back to the previous strong resistance level
at 0.6780 which is likely to be key in determining the next direction for the
pair. We either see a breakout and another rally or a strong rejection.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see how the pullbacks
for the AUDUSD pair have been shallow as the market priced out all the
hawkishness priced in in May. The moving averages are
crossed to the upside indicating a clear uptrend and we should see the red 21
moving average acting as dynamic support for the next pullback. If we look
left, we can also notice how the divergences with the
MACD at key
levels turned into big reversals. Now we have another one right when we are
trading into the strong 0.6780 resistance, so this may be a signal for a bigger
correction incoming.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the big divergence that’s been going on since the 0.66 level. The price
has been trading upwards within a rising channel and when these types of
divergent channels break, we can generally see a big correction all the way
back to the base of the channel, which in this case would be the 0.66 level. If
we see the price breaking above the 0.6780 resistance, we can expect more
buyers piling in and extending the rally towards new highs. The sellers, on the
other hand, will want to see the price breaking out of the channel and below
the 0.6730 support zone to jump onboard and target the 0.66 handle.

This week is filled with many important events, beginning
with the release of the US CPI report today. This report should influence
expectations for tomorrow’s FOMC rate decision and also for the next meetings.
The most straightforward scenarios are likely to be a rally in the AUDUSD pair
if the CPI data misses across the board as that would make the market to price
out the probabilities for a July hike. On the other hand, if the CPI beats on
all fronts, we should see the pair selling off and validate the bearish setup. The
market focus is likely to be on the Core CPI, making it the most crucial metric
to monitor today.

Later in the week, we have
the release of the US Jobless Claims report and the University of Michigan
consumer sentiment survey. In the previous release of the consumer sentiment
survey, there was a significant surge in long-term inflation expectations,
which had a substantial impact on the hawkish market pricing. Therefore, if we
see a miss there, it would be viewed as positive news for the AUDUSD bulls.

See also the video below