Basic overview
The USD has been a bit weaker recently due to lower than expected US inflation figures last week which sent Treasury yields lower and caused the market to price in more opportunities height of second level cut before the end of the year.
We've also had a lot of whipsaws in the last couple of days caused by tax headlines. On Monday, the greenback weakened after a WSJ report says Trump would release the trade outlook but not yet impose tariffs.
Yesterday, on the other hand, the US Dollar strengthened as Trump spoke to the media and said that he plans to impose 25% taxes on Canada and Mexico next week. Those benefits were later erased, but Trump certainly brought more instability.
On the AUD side, as a reminder, the RBA cleaned further his stance on the final policy decision as he approaches the cut in the first stage. The market sees a 65% chance of a 25 bps cut in February although the first full price cut could be seen in April.
The latest Australian Employment report came in a touch softer than expected but did not change much in terms of market prices which have been affected by the recent results either. Australian monthly CPI that showed a reduction in core inflation with the CPI Trimmed Y/Y coming in at 3.2%.
AUDUSD Technical Analysis – Daily Time Chart
AUDUSD per day
On the daily chart, we can see that AUDUSD broke above the major line of motion recently and is now near a major swing level at 0.63. The sellers are likely to step in around these levels to set up for a drop back to the lows. The buyers, on the other hand, want to see the price break higher to increase the bullish bets into the 0.65 handle next.
AUDUSD Technical Analysis – 4 hour timeframe
AUDUSD 4 hours
On the 4 hour chart, we can see that we now have an upward trend line defining the current bullish trend. If we get a pullback into it, we can expect the buyers to continue the move to position for the breakout above the front. On the other hand, the sellers want to see the price break lower to increase the bearish bets to low levels.
AUDUSD Technical Analysis – 1 hour timeframe
AUDUSD 1 hour
On the 1 hour menu, we can see that we have a small person support zone around the 0.6250 level. If the price pulls back, we can expect the buyers to step in there to position for the break above the resistance, while the sellers will look for a break below to target. the upward trend line. The red lines define the average daily range for today.
Catalysts to come
Tomorrow we'll be getting the latest US jobless claims numbers, and on Friday we'll finish the week with Australia's Flash and US PMI.
