AUDUSD Technical Analysis – We are testing a key resistance

Fundamental Overview

Yesterday, the US PPI report came in higher than expected but the focus was on the details that feed into the Core PCE index, which is what the Fed focuses on. Those details were all very soft and helped to bring the early estimates down to more benign levels. In fact, the Core PCE Y/Y is now projected to fall to 2.6% vs. 2.8% prior. That’s good news for the Fed.

The US Dollar fell across the board as a result and eventually the bearish momentum increased substantially in the evening as the Trump’s tariffs saga came to an end. In fact, the US President announced his reciprocal tariffs that could go into effect in April but the overall tone of it wasn’t aggressive and sounded a lot like the start of a negotiating process to bring tariffs to a fair level for everyone.

On the AUD side, it’s been all about the US Dollar softness and with the markets now less concerned about tariffs, the other major currencies got the green light to appreciate against the greenback.

On the data side, the Australian Q4 CPI report recently missed expectations across the board with the underlying inflation figures easing further and now comfortably in the RBA’s target range on a 6-month annualised basis.

As a reminder, the RBA softened further its stance at the last policy decision as it nears the first rate cut. The market is now seeing an 86% chance of a 25 bps cut in February with a total of 75 bps of easing expected by year end.

AUDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that AUDUSD is testing the key resistance zone around the 0.6330 level. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the 0.6170 level. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 0.65 handle next.

AUDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have an upward trendline defining the bullish momentum. If we get a pullback into it, we can expect the buyers to lean on the trendline with a defined risk below it to position for the break above the resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.6170 level next.

AUDUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, there’s not much we can add here as the sellers will pile in around these levels, while the buyers will look for a breakout to extend the rally into new highs. The red lines define the average daily range for today.

Upcoming Catalysts

Today we conclude the week with the US Retail Sales.