The AUDUSD currency pair muted in anticipation of a deluge of economic data scheduled for the week. The Greenback’s bullish run was fuelled by US macroeconomic data, which bolstered expectations for prolonged higher interest rates. Furthermore, Federal Reserve Chairman Jerome Powell reinforced this outlook, stating the necessity for further interest rate hikes to curb lingering inflation.
Nonetheless, the interest rate trajectory remains data-dependent, elevating the importance of the forthcoming US economic figures this week. The ADP Employment Change is anticipating a decline from 324K to 195K, indicative of an overall cooldown in the labour market. Meanwhile, GDP growth is expected to increase by 2.4% this quarter from the previous quarter’s growth of 2%. The PCE Index is expected to grow from 3% to 3.3%, while the Core PCE index is expected to increase from 4.1% to 4.2%. If headline inflation climbs this month, the Fed might be swayed to hike rates if GDP data aligns with expectations. However, labour market data remains concerning, prompting uncertainty within the market.
Technical
The AUDUSD currency pair flattened on the 4H Chart ahead of a hoist of macroeconomic data from the US. A descending channel pattern threatened the currency pair, but uncertainty surrounding the Fed’s interest rate path kicked the price action out of the channel, establishing resistance at 0.64859, the 23.60% Fibonacci level.
Since the price action has edged above the 50-day moving average, the currency pair may be encouraged to retest the 0.64859 resistance, which could mark a pivot point for an uptrend as the price action surpasses the 100-day moving average.
However, a surge in selling volume could forfeit an uptrend and encourage a potential pullback towards the 0.63854 major support. If the major support is broken down, a downtrend may recommence.
Summary
The AUDUSD currency pair has flattened ahead of Fed uncertainty and a hoist of US macroeconomic data. If the price action surpasses the 0.64859 resistance, an uptrend may provide the currency pair with respite. However, selling pressure could encourage a pullback towards the 0.63854 major support.
Sources: TradingView, Reuters
