August 06, 2024 at 09:39AM
Fundamental
Overview
The weak US NFP report last Friday led to a key breakout in
the USDJPY pair which eventually triggered another deleveraging in the Yen
carry trades. Things got dire yesterday as the Nikkei dropped 12% overnight and
we saw a general selloff in global stock markets.
This led to risk-off flows
and at one point, the markets saw the Fed cutting rates by 136 bps by year-end
and some chances of an emergency rate cut. Although the volatility calmed down
a bit, the markets are still expecting a 50 bps cut by the Fed in September and
a total of 110 bps by year-end.
The AUD got pressured by
the risk-off sentiment but bounced back pretty quickly erasing all the losses since
last Friday. The RBA
today kept interest rates unchanged as expected and pushed back against imminent
rate cuts expected by the market as they want to see more evidence that
inflation is moving sustainably to target.
AUDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that AUDUSD spiked lower into the April’s lows around the 0.6360 level due
to the global market rout we saw early on Monday. The price eventually erased
the losses, and we are now trading above the 0.6464 level.
The buyers will likely pile
in around these levels with a defined risk below the 0.6464 level to position
for a rally into the 0.66 handle. The sellers, on the other hand, will want to
see the price falling below the 0.6464 level again to target another drop into
the 0.6360 level.
AUDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we are having some consolidation around the 0.65 handle. A break above
the downward trendline
should give the buyers a bit more confidence and will likely increase the
bullish momentum.
AUDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we are basically trading in a range between 0.6480 and 6560 levels. The
buyers will want to see the price getting above the range, while the sellers
will look for a breakout to the downside. The red lines define the average daily range for today.
Upcoming
Catalysts
This week is basically empty on the data front. The only notable economic release
will be on Thursday when we get the latest US Jobless Claims figures. The
market will also pay close attention to Fed members’ comments given the latest
developments in the markets.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
