AUDUSD Technical Analysis – Price movement remains in a range

Basic overview

The USD started the week on the wrong foot as the new month began. Last week’s strength may have been influenced by end-of-quarter flows rather than fundamental factors, as economic data did not change interest rate expectations. Nevertheless, the data should continue to support risk sentiment amid a growth recovery without inflationary pressures.

The AUD, on the other hand, is likely to be at an advantage in such an environment, as it is also supported by a slightly more aggressive RBA. Last week, the Aussie was boosted by another hot monthly CPI report, which increased the likelihood of a rate hike, although RBA chief Hauser tempered expectations somewhat, saying he would prefer to keep rates stable for longer.

AUDUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that AUDUSD is approaching the key resistance zone around the 0.6713 level. If everything else remains unchanged, the fundamentals for an upside breakout are in place. This is what buyers want to see in order to extend their bullish bets to the 0.6870 level next.

Sellers, on the other hand, are likely to intervene in the resistance zone of 0.6713, above which there is a defined risk, to prepare for a decline to the lower zone of 0.66.

AUDUSD Technical Analysis – 4-hour time frame

On the 4-hour chart, we can see more clearly the price action between the resistance at 0.67 and the support at 0.66. These are the key levels that the market needs to break through to start a more sustainable trend. For now, we could continue to fluctuate until we get a clear breakout.

AUDUSD Technical Analysis – 1-hour time frame

On the 1-hour chart, we can see that the recent price action has formed another small range between the support at 0.6625 and the resistance at 0.6680. From a risk management perspective, buyers will definitely have a better risk-reward ratio around the supports, while sellers will want to lean on the resistances.

However, if the price stays above the 0.6680 resistance, buyers should remain in control and extend the rally to the 0.6713 resistance. The red lines define the average daily range for today.

Upcoming catalysts

This week is full of important events. We start today with the release of the US ISM Manufacturing Purchasing Managers Index. Tomorrow we have the US job openings and Fed Chair Powell’s speech. On Wednesday we get the US ADP, US jobless claims, US ISM Services Purchasing Managers Index and the FOMC meeting minutes. Thursday will be a US holiday, Independence Day. Finally, we end the week on Friday with the US NFP report.