This week, Federal Reserve System he looked a little more hawkish than expected. They decided to keep interest rates at 5.00-5.25% without any changes, but raised the predicted terminal rate in the Dot Plot by 50 basis points. The FOMC decided to pause and gather more economic data before deciding on a potential rate hike in July. Their caution is supported by the fainter details found in the latest NFP message, ISM Services PMI message a CPI although core inflation remains high.

Fed Chairman Powell mentioned that the July meeting is “lively” but refrained from making any definitive commitments. When the Dot Plot was released, the market quickly bid up the US dollar, but once Powell’s press conference began, the value returned to its original level. Overall, this shows that the Federal Reserve is ready to take further measures to reduce inflation, but their decisions are being driven by economic data. Yesterday count US Jobless Claims again significantly missed expectations, which indicates a possible weakening of the labor market.

AUDUSD Technical Analysis – Daily Time Frame

On the daily chart, we can see that once the AUDUSD pair broke from the key resistance at 0.6781, it took off with the help of yesterday’s weaker US Jobless Claims. The price can be dragged as shown by the distance from the blue 8 moving average. In such cases, we can generally see some consolidation or retracement of the moving average before the next move.

AUDUSD Technical Analysis – 4 Hour Time Frame

On the 4-hour chart, we can see how the price has been trending neatly upwards within an ascending channel, with the red moving average of 21 acting as dynamic support. Now that the price has reached the upper boundary of the channel, we can expect a decline if today’s US data does not fall short of expectations.

AUDUSD Technical Analysis – 1 Hour Time Frame

On the 1-hour chart, we can see that from a risk management perspective, buyers would have a better risk-reward setup if they waited for the price to pull back to the bottom of the channel where we can find the confluence of the previous swing high support, 50% Fibonacci retracement level, the 4-hour moving average of 21 and the daily moving average of 8. Sellers, on the other hand, can either try to short at these levels to the lower boundary of the channel or wait for the price to break below 0.6781 resistance turned support extend a possible sell-off to the 0.6563 level.

Today, the market will pay close attention to the University of Michigan consumer sentiment report. Most recently, the market reacted strongly to this as long-term inflation expectations showed a significant increase, from 3.0% to 3.2%. However, this figure was later adjusted to 3.1%. So if we see a further rise in long-term inflation expectations, the value of the dollar is likely to rise. On the contrary, if the data does not meet the forecasts, we can expect the dollar to fall.