The Australian Dollar continues to strengthen following the RBA's hawkish stance. The direction of the US Dollar depends on the upcoming US Non-Farm Payrolls report.

Market Fundamentals Overview

US Dollar (USD) Update

The US Dollar experienced additional downward pressure yesterday after softer-than-expected US Retail Sales and Employment Cost Index data. As a result of these weaker figures, market expectations shifted slightly, now anticipating 60 basis points of rate cuts by the end of the year—up from 58 basis points prior to the data release.

All eyes are on today’s US Non-Farm Payrolls (NFP) report, which could play a crucial role in determining the Dollar’s direction. If the data is robust, there is a significant chance that markets will adjust towards a more hawkish outlook, potentially triggering a broad-based rally in the greenback.

Conversely, a disappointing NFP report would likely reinforce the case for further Federal Reserve easing. This could prompt traders to bring forward their expectations for rate reductions, especially as some Fed officials have voiced doubts about the stability of the labor market. In this scenario, the US Dollar would likely face renewed selling pressure.

Australian Dollar (AUD) Insights

The Australian Dollar continues to strengthen, supported by the Reserve Bank of Australia’s (RBA) hawkish stance. Recently, the RBA increased its Cash Rate by 25 basis points, raising it to 3.85%. The central bank surprised markets by signaling the possibility of two additional rate hikes before year-end, whereas only one was previously anticipated.

Today, the AUD received a further boost following assertive remarks from RBA’s Hauser, who reaffirmed the central bank’s readiness to tighten policy if necessary. While these comments were not entirely new, they highlight the market’s enthusiasm for buying the Australian Dollar.

Daily Chart Analysis: AUDUSD

On the daily timeframe, AUDUSD is approaching a significant resistance area near 0.7150. A trendline continues to support the ongoing bullish momentum. For buyers, entering positions near this trendline offers a favorable risk-to-reward opportunity to target new highs. Sellers, meanwhile, may wait for a decisive break below the trendline to initiate positions aiming for a move towards the next support zone around 0.68.

4-Hour Chart Analysis: AUDUSD

On the 4-hour chart, a minor support area has formed around 0.7090. Should the price pull back to this level, buyers are likely to step in, placing stops just below support and aiming for a continuation of the upward trend. Sellers, on the other hand, will be watching for a breakdown below this zone to target a move towards the underlying trendline.

1-Hour Chart Analysis: AUDUSD

Looking at the 1-hour timeframe, the 0.7090 support level—bolstered by a minor trendline—offers buyers a promising entry point with a favorable risk profile. Sellers will be monitoring for a break beneath this area, which could open the door for a decline towards the major trendline near 0.6950. The red lines on the chart indicate the average daily range for today.

Key Economic Events Ahead

• Today: US Non-Farm Payrolls (NFP) report
• Tomorrow: US Jobless Claims data
• Friday: US Consumer Price Index (CPI) release