AUD USD

The Aussie is coiling beneath 0.7000 ahead of US CPI, with its relationship with US front-end yields strengthening sharply just as markets question whether the Fed will need to hike again this month.

Aussie is pressing a key trend barrier after rebounding from support, with next week’s CPI report poised to test the recovery.

With major macro catalysts scarce, the Australian dollar is taking its cues from risk appetite and relative yields. Two emerging technical patterns suggest AUD/USD and AUD/JPY could be worth monitoring for very different reasons.

Sr. Technical Strategist Michael Boutros highlights the levels that matter on the USD Majors, commodities, and equity indices charts this week.

US yields, dollar strength and fading RBA hike bets have combined to drive AUD/USD to fresh multi-month lows. The macro and technical bias remains bearish, although history suggests parts of the move are now reaching unusually stretched levels.

AUD/USD fell after the RBA rate hike because the central bank's hawkish stance was already priced in while the U.S. dollar stayed firm.

Aussie momentum has deteriorated sharply into quarter-end, with inflation, Core PCE and NFP on tap as AUD/USD closes in on a pivotal technical threshold.

The AUD/USD was unable to benefit from the Reserve Bank of Australia’s 25-basis-point rate hike overnight. The RBA lifted the cash rate to 4.60%, in line with expectations. However, the Australian dollar weakened following the decision, with much of the Bank’s hawkish stance seemingly priced in ahead of the announcement. The US dollar has also remained largely supported following the recent turmoil in the bond markets.

The RBA delivered the expected 25bp hike, but Bullock’s press conference now looms as the bigger volatility risk for AUD/USD and the ASX 200.

Recent trading sessions have reflected a more neutral tone around the Australian dollar. This can be seen in AUD/USD price action, which has posted moves of roughly 0.2% over the last two sessions without establishing a clear direction. Much of this lack of momentum is linked to expectations surrounding the next policy moves from both the Reserve Bank of Australia (RBA) and the Federal Reserve.

The week has started with stocks, gold, silver and bitcoin all falling, as crude oil rebounded and bond yields pushed further higher. Trump refusing to agree to Tehran’s proposal to re-open the Strait of Hormuz has left the markets disappointed. Still, reports that mediators are expected to hold talks with the two sides on an amended version of the 7-day proposal that Iran presented, keeps hopes alive that we may see some progress.

AUD/USD remains under pressure after breaking key trend support, with the latest decline putting the focus on the next major downside pivot.