Expert Reveals Why Investors Should Be CautiousExpert Reveals Why Investors Should Be Cautious
XAG/USD Vulnerable Amid Hawkish Fed Rate StanceXAG/USD Vulnerable Amid Hawkish Fed Rate Stance


  • The Fed left interest rates unchanged as
    expected with basically no change to the statement.
  • Fed Chair Powell stressed
    once again that they are proceeding carefully as the full effects of policy
    tightening have yet to be felt.
  • The recent US Core PCE came
    in line with expectations.
  • The labour market is
    starting to show some weakness as Continuing Claims
    yesterday showed another increase and the NFP data
    last Friday missed across the board.
  • The US Consumer
    fell for the third consecutive month
    although the data beat expectations.
  • The US ISM
    Manufacturing PMI
    last week missed expectations by a big
    margin, followed later on Friday with a disappointing ISM Services PMI,
    although the index remained in expansion.
  • The market doesn’t expect the Fed to hike anymore.


  • The
    RBA raised the cash rate by 25 bps as expected as the central bank
    judged that the move was warranted to be more assured that inflation would
    return to target in a reasonable timeframe.
  • The
    CPI report recently surprised to the upside
    prompting the market to price in a higher chance of another rate hike from the
    RBA in November, which is what we eventually got.
  • The
    RBA Governor Bullock downplayed the beat in the CPI data
    and made the market to pare back the rate hike bets.
  • The
    labour market continues to weaken as seen also
    recently with the miss in the employment change and the losses in full-time
  • The
    Australian Manufacturing PMI fell further into contraction with
    the Services PMI plummeting back into contraction as well.
  • The
    market expects the RBA to hold rates steady at the next meeting.

AUDUSD Technical Analysis –
Daily Timeframe


On the daily chart, we can see that the AUDUSD pair
last week surged into the key resistance around
the 0.65 handle but erased all the gains this week. It looks like the US Dollar
is starting to be seen as the best out of a bad bunch as recessionary data
continues to accumulate. The Fedspeak recently has also been leaning on the
hawkish side as the Fed wants to keep another rate hike on the table.

AUDUSD Technical Analysis –
4 hour Timeframe

AUDUSD 4 hour

On the 4 hour chart, we can see the selloff from
the key 0.65 resistance zone found support around the 0.6390 level where we had
also the trendline for confluence. The
price yesterday broke decisively below it, invalidating the bullish setup. The
sellers should now be more in control and from a risk management perspective,
they are likely to lean on the downward trendline where there’s the confluence
with the previous support turned resistance, the red
21 moving average and the Fibonacci retracement level.

AUDUSD Technical Analysis –
1 hour Timeframe

AUDUSD 1 hour

On the 1 hour chart, we can see more
closely the bearish setup around the 0.6390 level. We can also notice that the
latest leg lower diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a confirmation for a pullback into the
resistance and then a continuation of the bearish trend. The buyers, on the
other hand, will want to see the price breaking above the resistance to
invalidate the bearish setup and position for a rally back to the highs.

Upcoming Events

Today the only market moving event will be the
release of the University of Michigan Consumer Sentiment report.

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