AUDUSD Technical Analysis – The AUD comes under pressure amid the risk-off mood

Fundamental Overview

The USD continues to be supported against most major currencies, especially the commodity currencies, as the markets remain in a risk-off mood following some bad US data releases. In fact, since last Friday, we got weak US Flash Services PMI, UMich final Consumer Sentiment and yesterday a weak US Consumer Confidence report.

The problem is that we’ve also got inflation expectations jumping to new highs in both the UMich and the Conference Board report. The market might be fearing that in case we get a slowdown, the Fed might not be fast enough in cutting rates amid inflation remaining above target and uncomfortably high long-term inflation expectations.

This is something to keep in mind in light of the next NFP and CPI reports coming out before the March FOMC decision where we will also get the updated SEP and Dot Plot.

On the AUD side, the RBA cut interest rates by 25 bps as expected recently bringing the Cash Rate to 4.10% but it was accompanied by a more hawkish than expected guidance. After the rate decision, we got a strong Australian Employment report and today the monthly Trimmed-Mean CPI ticked higher to 2.8% remaining near the upper bound of the 2-3% target range.

AUDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that AUDUSD is falling back below the key support zone around the 0.6330 level. This is where we can expect the sellers to pile in to position for a drop into the 0.62 handle. The buyers, on the other hand, will want to see the price rising back above the zone to start targeting the 0.65 handle next.

AUDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have a downward trendline defining the current pullback. We can expect the sellers to lean on the trendline to keep pushing into new lows, while the buyers will look for a break higher to increase the bullish bets into the 0.65 handle.

AUDUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much we can add here as the sellers will keep pushing into new lows, while the buyers will look for a break above the trendline to gain more conviction for new highs. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we get the latest US Jobless Claims figures, while on Friday we conclude the week with the US PCE data.