FundamentalOverview

The USD got a short termboost recently as Trump floated reciprocal tariffs. That came after a good US NFP report where the data was mixed at best butstill pointing to strength. The jump in average hourly earnings caught the eyebut that might have been distorted by the drop in average weekly hours.

We’ve also got another jumpin inflation expectations in the University of Michigan ConsumerSentiment surveyshowing that the tariffs news is the main culprit of the recent surge inexpectations.

The focus now switched tothe US CPI report due later today where Core inflation is expected to ticklower which would be a welcome news. A lower than expected print should see theUS Dollar losing ground across the board once again, while a hot reading mightboost the greenback for the rest of the week.

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

As a reminder, the RBA softenedfurther its stanceat the last policy decision as it nears the first rate cut. The market is now seeingan 84% chance of a 25 bps cut in February with a total of 75 bps of easingexpected by year end.

AUDUSDTechnical Analysis – Daily Timeframe

On the daily chart, we cansee that AUDUSD is rejecting the key resistance zone around the 0.63 handle. Thisis where the sellers are stepping in with a defined risk above the resistanceto position for a drop back into the 0.6170 level. The buyers, on the otherhand, will want to see the price breaking higher to increase the bullish betsinto the 0.65 handle next.

AUDUSD TechnicalAnalysis – 4 hour Timeframe

On the 4 hour chart, we cansee that we have a minor support zone around the 0.6235 level. If the pricegets there, we can expect the buyers to step in with a defined risk below thesupport to position for a break above the resistance. The sellers, on the otherhand, will look for a break lower to increase the bearish bets into the 0.6170level next.

AUDUSD TechnicalAnalysis – 1 hour Timeframe

On the 1 hour chart, there’snot much we can add here as the sellers will keep on pushing towards the 0.6235support, while the buyers will look for a break above the resistance. From arisk management perspective though, it would be much better to wait for the USCPI report as any technical setup can be invalidated in a blink of an eye whenthe data gets released. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the US CPI report. Tomorrow,we get the US PPI and the latest US Jobless Claims figures. On Friday, weconclude the week with the US Retail Sales data.