The USD remained steady as the Fed decided to keep interest rates unchanged at its recent meeting, with no significant changes to the statement. Projections for 2024 still indicate three rate cuts, while economic forecasts were upgraded with higher growth and inflation, and a lower unemployment rate.
On the other hand, the US Q1 GDP fell short of expectations, although core components showed a robust economy. The Core PCE exceeded expectations, delaying potential rate cuts.
In terms of data, the US CPI outperformed expectations for the third consecutive month, while the US PPI met forecasts. The US NFP also surpassed expectations across the board, with average hourly earnings in line with forecasts. However, US PMIs in April missed expectations, with lower inflationary pressures and increased layoffs being cited.
Looking ahead, the market anticipates the first rate cut in September.
Turning to the AUD, the RBA maintained interest rates as anticipated at its latest meeting and dropped its tightening bias. The CPI report exceeded expectations, with strong underlying inflation measures. However, the latest labor market report fell short of expectations.
Wage growth in Australia remained robust, with the wage price index surprising to the upside. The most recent Australian PMIs showed the Manufacturing PMI nearly returning to expansion, while the Services PMI slightly decreased but remained in expansion.
Market expectations suggest the first rate cut for the AUD in February 2025.
In terms of technical analysis for AUDUSD, on the daily chart, the pair rallied to the key resistance zone around the 0.6520 level. Buyers are looking for further upside momentum towards the major trendline at the 0.66 handle, while sellers may seek shorting opportunities on lower timeframes.
On the 4-hour chart, a trendline and the red 21 moving average define bullish momentum, with buyers likely to support any pullbacks towards the trendline. Sellers will look for a breakdown towards new lows.
The 1-hour chart shows potential divergence with the MACD, indicating weakening momentum that could lead to a pullback or reversal. Buyers may seek to buy the dip if the price retraces towards the trendline, while sellers could push for new lows if the trendline breaks.
Looking ahead, the week concludes with the US PCE report.