This resistance has been capping AUDUSD upside since 2023: Will we finally get a breakout?

FUNDAMENTAL
OVERVIEW

USD:

The US Dollar sold off
across the board on Friday following rumours of the NY
Fed conducting rate ​checks on the USD/JPY pair. The market took that as a
signal of a potential intervention to strengthen the Japanese Yen and the
unwinding of positions weighed on the greenback.

This wasn’t a
fundamental-driven move but a “technical” one. In general, such reactions are eventually
faded in the following days. The problem for the dollar is that there’s no
strong reason for it to appreciate yet.

This week, we have the FOMC
decision on Wednesday where the central bank is expected to keep interest rates
unchanged and maintain a data-dependent approach for the next rate cuts. There
shouldn’t be any surprise at this meeting. February might be key for the US
Dollar as we get another set of economic data, with the NFP report likely being
pivotal for the market pricing.

In fact, we’ve been seeing
notable improvements in the US Jobless Claims data that could point to a re-acceleration
in the labour market. The market is still pricing 48 bps of easing by year-end.
Those bets are likely to be pared back in case the data strengthens and should
provide support for the greenback.

AUD:

On the AUD side, the
currency surged following the blockbuster Australian jobs report last week that triggered a
hawkish repricing in interest rates expectations with traders now expecting a
rate hike already at the upcoming RBA meeting (63% probability).

As a reminder, the RBA at
the last policy decision sounded more hawkish following a series of
higher-than-expected inflation reports. The central bank also discussed whether
a rate hike might be needed at some point in 2026.

This week we have the Australia’s
quarterly inflation report. We will likely need very soft data to bring the February
rate hike probabilities below 50%. Another hot report is going to seal the rate
hike.

AUDUSD TECHNICAL
ANALYSIS – DAILY TIMEFRAME

On the daily chart, we can
see that AUDUSD finally
reached the 0.69 handle with the price now trading a bit above it. We are now
at a very strong resistance zone that capped the upside since 2023. We can
expect the sellers to step in around these levels with a defined risk above the
resistance to position for a pullback into the trendline. The buyers, on the
other hand, will look for a breakout to increase the bullish bets into new
highs.

AUDUSD TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour chart, we can
see that we have an upward trendline defining the bullish momentum on this
timeframe. If we get a pullback, we can expect the buyers to lean on the
trendline with a defined risk below it to position for a rally into new highs.
The sellers, on the other hand, will look for a break lower to increase the
bearish bets into the major trendline.

AUDUSD TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, we can
see that we have another minor trendline defining the bullish momentum on this timeframe.
The buyers will likely continue to lean on the trendline to keep pushing into
new highs, while the sellers will look for a break lower to extend the pullback
into the next trendline. The red lines define the average daily range for today.

UPCOMING CATALYSTS

Tomorrow we have the weekly US ADP jobs data and the US Consumer Confidence
report. On Wednesday, we have the Australian quarterly CPI report and the FOMC
policy announcement. On Thursday, we get the latest US Jobless Claims figures.
On Friday, we conclude the week with the US PPI report.