FUNDAMENTAL
OVERVIEW
USD:
The US Dollar had a good
run last week on some unwinding of overstretched US Dollar shorts and mostly
stronger US data. The bullish momentum eventually faded as we got a very weak
US Job Openings report that coupled with the selloff in the stock market
weighed on the market pricing. The focus has now turned to the US NFP report on
Wednesday as that’s going to be pivotal for the US Dollar.
In fact, the market is
pricing 54 bps of easing for the Fed this year, so there’s a high risk of a
hawkish repricing in case the data comes out strong. In such a scenario, we
will likely see the greenback rallying across the board.
On the other hand, a weak
report should strengthen the case for more Fed easing and might even see
traders bringing forward rate cut bets as some Fed members expressed scepticism
about labour market stabilisation. In that case, the US Dollar will likely come
under renewed pressure on dovish Fed bets.
AUD:
On the AUD side, the RBA
hiked the Cash Rate by 25 bps as widely expected bringing it back to 3.85%. The
central bank delivered a hawkish surprise as it signalled two more rate hikes
by year-end compared to just one expected by the market at the time.
We got the hawkish
repricing in interest rate expectations with traders now seeing 40 bps of tightening
in 2026. The focus will remain on the data but it will need to be very hot to
get the market to price in even more rate hikes.
AUDUSD TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that AUDUSD retested the support zone
around the 0.69 handle and eventually rallied as the US Dollar came under
renewed pressure. The buyers continue to target the resistance zone around the
0.7150 level. If the price gets there, we can expect the sellers to step in
with a defined risk above the resistance to position for a drop back into the
0.69 support. The buyers, on the other hand, will look for a break higher to
increase the bullish bets into new cycle highs.
AUDUSD TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see we have a minor resistance zone around the 0.7050 level. This is where we
can expect the sellers to step in with a defined risk above the resistance to
position for a drop back into the 0.69 support targeting a breakout. The
buyers, on the other hand, will look for a break higher to increase the bullish
bets into the 0.7150 resistance next.
AUDUSD TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much else we can add here as the sellers will likely step in around these
levels to target new lows, while the buyers will look for a break higher to
extend the rally into new highs. The red lines define average daily range for today.
UPCOMING CATALYSTS
Tomorrow we get the US December Retail Sales and the US Employment Cost Index
data. On Wednesday, we have the US NFP report. On Thursday, we get the US
Jobless Claims figures. On Friday, we conclude the week with the US CPI report.
This article was written by Giuseppe Dellamotta at investinglive.com.