October 25, 2024 at 11:27AM
Fundamental
Overview
It looks like the market is
taking some breather after an incredible rally in the US Dollar. This week was
pretty empty on the data front, and we haven’t got any meaningful catalyst. The
main culprit for the US Dollar strength has been the rally in long term
Treasury yields.
The yield curve has been
bear-flattening which is what you would expect with higher growth and
potentially higher inflation expectations. There’s been a good argument that
the markets have been already positioning for a Trump victory which is expected
to strengthen the higher growth and less rate cuts expectations.
For now, this is the trend
and it’s generally a bad idea to fight such trends without a strong catalyst.
Unfortunately, we don’t have much left for October as the main events will be
in the first weeks of November when we will get the top tier economic reports,
the US elections and the FOMC decision.
On the AUD side, the latest
data has been pretty strong with the Australian labour market report last week beating expectations by a
big margin. Although it didn’t change much in terms of interest rate
expectations, it reinforces the RBA’s hawkish stance.
AUDUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that AUDUSD is bouncing from the key swing level at 0.6622. This is where
the buyers are stepping in with a defined risk below the level to position for
a rally into the 0.68 handle. The sellers, on the other hand, will want to see
the price breaking lower to increase the bearish bets into the 0.65 handle
next.
AUDUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a strong resistance
level at 0.6660 where we can also find the trendline
for confluence.
If we get a pullback into the resistance, we can expect the sellers to step in
with a defined risk above the level to position for the break below the 0.6622
support. The buyers, on the other hand, will want to see the price breaking
higher to increase the bullish bets into the 0.68 handle.
AUDUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see more clearly the recent price action with the several rejections from the
0.6622 support as the sellers have been struggling to break through. There’s
not much more we can add as the sellers will look to short from the trendline
or on a break lower, while the buyers will want to see the price breaking the
resistance to increase the bullish bets into new highs. The red lines define
the average daily range for today.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
