AUD/USD Forecast: Aussie loses strength after being rejected from above 0.6500
AUD/USD Current Price: 0.6475
- Inflation slowed further in July in Australia; Private Credit and CAPEX data due on Thursday.
- US Dollar hit again by weaker than expected US data; Core PCE and Jobless Claims ahead.
- The AUD/USD failed to hold above 0.6500 and lost momentum.
The AUD/USD reached two-week highs on Wednesday, boosted by a weaker US Dollar, but then pulled back, erasing all gains after failing to hold above 0.6500. The short-term bias is still to the upside but is losing momentum.
The July Monthly Consumer Price Index came in at 4.9%, below the market consensus of 5.2% and lower than June's 5.4%. This news will likely be welcomed by the Reserve Bank of Australia (RBA) and practically solidifies the expectation of no rate hike at the next meeting. Another report showed that Building Permits declined by 8.1%, which was worse than the expected 0.8% increase. However, the inflation figures and the decline in building approvals did not weigh heavily on the Australian Dollar. On Thursday, Australia will release Private Capital Expenditure and Price Secta.
Data from the US again came in below expectations. According to Automatic Data Processing (ADP), private employment grew by 177,000, below the market consensus of 195,000. Q2 GDP growth was revised lower from 2.4% to 2.1%. On Thursday, the focus will be on the Federal Reserve's preferred inflation gauge, the Core Personal Consumption Expenditure Price Index. Additionally, the weekly Jobless Claims and the Chicago PMI will be released. On Friday, the official employment report will be published.
The US Dollar dropped again on Wednesday but showed signs of stabilization later. The data due on Thursday will be critical. In Wall Street, the positive mood vanished and weighed on the Aussie. Chinese data during Thursday's Asian session will also be important for market sentiment and, therefore, the AUD/USD.
AUD/USD short-term technical outlook
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The bullish momentum of AUD/USD faded above 0.6500 and pulled back. It is hovering around the 20-day Simple Moving Average (SMA). The Relative Strength Index (RSI) suggests that the upside could resume, but the area between 0.6480 and 0.6500 remains a significant barrier.
On the 4-hour chart, AUD/USD maintains a bullish bias; however, the retreat may continue as long as it remains below 0.6500. The bearish correction could extend to 0.6450 and find support at the next level of 0.6440. Below 0.6440, the pair may test a trendline at 0.6410. If the price falls below that level, the short-term bias will favor the US Dollar.
On the upside, if the pair consolidates above 0.6500, further gains are likely, with an initial target at 0.6530, followed by 0.6550.
Support levels: 0.6440 0.6410 0.6380
Resistance levels: 0.6500 0.6530 0.6555
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Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
