FundamentalOverview

The US Dollar fell acrossthe board in the final part of last week for two main reasons. The US PPI report came in higher than expected but thefocus was on the details that feed into the Core PCE index, which is what theFed focuses on. Those details were all very soft and helped to bring the earlyestimates down to more benign levels. In fact, the Core PCE Y/Y is nowprojected to fall to 2.6% vs. 2.8% in the prior month. That’s good news for theFed.

Eventually, the bearishmomentum increased substantially as the Trump’s tariffs saga came to an end. Infact, the US President announced his reciprocal tariffs that could go into effect in Aprilbut the overall tone of it wasn’t aggressive and sounded a lot like the startof a negotiating process to bring tariffs to a fair level for everyone.

On the AUD side, the RBA isexpected to cut interest rates by 25 bps tomorrow bringing the Cash Rate to4.10%. As a reminder, the RBA softenedfurther its stanceat the last policy decision as it prepared for the first rate cut. The marketis pricing a total of 75 bps of easing by year end.

These expectations havebeen shaped by the recent inflation data. In fact, the Australian Q4CPI missedexpectations across the board with the underlying inflation figures easingfurther and now comfortably in the RBA’s target range on a 6-month annualisedbasis.

Given the unwinding of longpositions in the US Dollar, a spike lower in AUDUSD on an RBA’s cut will likelybe faded.

AUDUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that AUDUSD is trading above the key resistance zone around the 0.6330 level. Thebuyers will likely continue to pile in around these levels to position for anextension into the 0.65 handle. The sellers, on the other hand, will want tosee the price falling back below the resistance to position for a drop into thelows.

AUDUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have an upward trendline defining the bullish momentum. Ifwe get a pullback into it triggered by the RBA’s cut, we can expect the buyersto lean on the trendline with a defined risk below it to position for a rallyinto the 0.65 handle. The sellers, on the other hand, will want to see theprice breaking lower to increase the bearish bets into the lows.

AUDUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much we can add here as the buyers will continues to pile in around theselevels, while the sellers will look for a break below the broken resistance toposition for a drop back into the lows. The red lines define the average daily range for today.

Upcoming Catalysts

Tomorrow we have the RBA rate decision. OnThursday, we get the Australian Employment report and the latest US JoblessClaims figures. On Friday we conclude with the Australian and the US FlashPMIs.