The missing US CPI report triggered a big sell-off in the USD, but the dollar bounced back very quickly as US data continued to surprise last week. Initial US Claims drop to record low levels, which again confirms the strength of the labor market. The US PMI yesterday showed a mixed picture, although the services PMI missed expectations, although it remained in expansionary territory, and the manufacturing PMI jumped from 46.2 to 49.0, although still in decline.

The RBA, on the other hand, left its cash rate unchanged with the usual hawkish comments and a promise to do more if data suggests. Actually the last one Minutes of the RBA meeting showed there was a strong case for a rate hike, but the central bank decided that holding steady was the better option and will reconsider at its August meeting. For now, the data points to further rate hikes Australian Jobs Report surprised awake again last week.

AUDUSD Technical Analysis – Daily Time Frame

On the daily chart, we can see that the AUDUSD failed to break above the 0.69 resistance again and sold down to the 0.6720 level, essentially erasing all gains following the US CPI miss. The price bounced off the red moving average of 21 and is now testing resistance at 0.6781.

AUDUSD Technical Analysis – 4 Hour Time Frame

On the 4 hour chart we can see that we have a good resistance level at 0.6781 where we can also find the 50% Fibonacci retracement level for confluence. We should see sellers leaning on this level with defined risk above resistance and first target the 0.67 support and after a break the 0.6563 level. On the downside, buyers will need the price to break above the resistance to rally and re-target the 0.69 handle.

AUDUSD Technical Analysis – 1 Hour Time Frame

On the 1-hour chart, we can take a closer look at the key resistance to watch. This is where the market should decide where it will go in the coming days or weeks. Above the resistance, the bias is bullish, while below the level it is bearish.

Upcoming events

Today we have a US consumer confidence report. This news is usually not a market mover, but if we get a big surprise, we should see the market react to it. Tomorrow we will see the latest Australian inflation data, which will be crucial for the next RBA meeting. Later in the day, the Fed is expected to hike by 25 bps, but the market will want to see if there are any signs of anything else or if it just reaffirms its reliance on the data. Thursday’s US Jobless Claims is likely to lead to more USD strength if the data beats expectations and some weakness if the data misses. Finally, we will see the latest US PCE and ECI reports on Friday, with the market likely to focus more on wages data given the tight labor market.