AUDUSD TECHS: Trend Needle Points North

• RES 4: 0.7202 High Jun 9
• RES 3: 0.7138 High Jun 10
• RES 2: 0.0.6996/7069 50-day EMA / High Jun 16 and key resistance
• RES 1: 0.6881/6964 20-day EMA / High Jun 28
• PRICE: 0.6787 @ 16:28 BST Jul 13
• SUP 1: 0.6685 High Mar 9 2020
• SUP 2: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
• SUP 3: 0.6588 Low May 28 2020
• SUP 4: 0.6538 Low May 26 2020

AUDUSD maintains a bearish tone and traded to a fresh trend low this week. The move lower on Monday resulted in a break of support at 0.6762, the Jul 5 / 6 low and 0.6759, 50.0% of the Mar ‘20 - Feb ‘21 bull cycle. The breach confirms a resumption of the downtrend and sets the scene for a move towards 0.6685, the Mar 9 2020 high. On the upside, initial firm resistance is seen at 0.6881, the 20-day EMA.

Lost opportunity for short end tactical traders or risk hedgers absent or sidelined late Wednesday when short end rates gapped lower. Lead quarterly EDU2 futures gapped lower, well past earlier CPI session lows to 96.34 (-34.5) after Atlanta Fed Bostic comments of "concerning" CPI while, "everything is in play" the Fed is "not wedded to any specific course of Fed action".

• Chances of a 100bp rate hike at the end of the month jumped from single digits to close to 75% after the move. Note, Fed goes into media blackout at midnight Friday -- going to hear more pop-up comments from Fed speakers by then.
• Participation grew thin in the second half after traders contended with heavy selling on higher than expected June CPI data as markets locked in expectations of a 75bps hike at month end. Yield curves hit 16+ year inverted lows as bonds rebounded, traded higher by midmorning. Option trade was largely mixed on call and put position unwinds followed by better 10Y call buying around midday.