On Monday, July 8th, the AUD/USD pair closed at 0.6737, down 0.18% for the day. This slight adjustment comes after the pair reached a six-month high of 0.6761 in Asian trading last Friday.
Key Factors Influencing the Aussie Dollar
- Profit-Taking:
- Monday’s slight decline was partly due to profit-taking following the recent high.
- Commodity Prices:
- A dip in commodity prices on Monday put some pressure on the AUD/USD pair.
- Diverging Central Bank Expectations:
- The Reserve Bank of Australia (RBA) and the U.S. Federal Reserve’s differing rate outlooks are limiting the Aussie’s downside.
- Market expectations:
- 27% probability of an RBA rate hike in August
- 80% probability of a Fed rate cut in September
Upcoming Events to Watch
- Fed Chair Powell’s Congressional Testimony (Tuesday/Wednesday)
- U.S. CPI Data Release (Thursday)
These events could potentially boost the Aussie if they reinforce expectations of a September Fed rate cut.
Technical Analysis
Daily Chart Outlook:
- Bullish signal: If AUD/USD closes above 0.6750 (76.4% Fibonacci retracement of the December-April downtrend from 0.6870 to 0.6361)
- Next target: 0.6870
Key Levels to Watch:
Resistance:
- 0.6770
- 0.6800
- 0.6840
Support:
- 0.6700-0.6710
- 0.6675-0.6680
Outlook for Traders
- The AUD/USD pair is showing resilience despite some profit-taking and commodity price pressures.
- The diverging central bank expectations provide a supportive backdrop for the Aussie.
- Keep a close eye on Powell’s testimony and the U.S. CPI data this week, as they could significantly influence the pair’s direction.
- From a technical perspective, a close above 0.6750 could signal further upside potential.
Remember, forex markets can be volatile and are influenced by a wide range of factors. Always use proper risk management techniques when trading, and stay informed about relevant economic news and data releases.