- AUD/USD alternated gains with losses around 0.6650.
- Renewed selling pressure in the US Dollar failed to lift AUD.
- Australia’s Consumer Inflation Expectations rose in May.
AUD/USD ended Thursday’s session barely changing around the mid-0.6600s, despite the resurgence of the corrective decline in the US Dollar (USD).
The pair's irresolute price action was accompanied by tepid weakness in the Greenback, while another print suggesting inflation in the country is expected to remain elevated should reinforce the hawkish stance by the Reserve Bank of Australia (RBA).
Also contributing to the downbeat tone around the Aussie dollar emerged another bearish session from both copper and iron ore prices.
On the monetary policy front, the RBA, similar to the Federal Reserve, has been slow to change its stance. In its latest meeting, the RBA maintained a hawkish approach, keeping the official cash rate at 4.35% and signalling flexibility for future decisions.
At that event, Governor Bullock confirmed that the board discussed potential rate hikes but ruled out cuts. The bank remains focused on inflation and is reluctant to ease policy unless necessary, emphasizing that inflation is still above target and reiterating its commitment to bring inflation within the target range.
The contrast between the potential easing by the Fed and the RBA's likely prolonged restrictive stance could support AUD/USD in the coming months. However, concerns about the slow momentum in the Chinese economy may hinder a sustained recovery in the Australian currency as China continues to face post-pandemic challenges.
In Australia, Consumer Inflation Expectations rose to 4.4% in June (from 4.1%), according to the Melbourne Institute.
AUD/USD daily chart
AUD/USD short-term technical outlook
If bulls take control, the AUD/USD may reach its May peak of 0.6714 (May 16), followed by the December 2023 high of 0.6871 and the July 2023 top of 0.6894 (July 14), all before the key 0.7000 level.
Bearish efforts, on the other side, may push the pair lower, first to the June low of 0.6574 (June 10) and subsequently to the important 200-day SMA of 0.6553. A further decline might result in a return to the May low of 0.6465 and the 2024 bottom of 0.6362 (April 19).
Overall, the uptrend should continue as long as the AUD/USD trades above the 200-day SMA.
The 4-hour chart demonstrates a lack of strong rising momentum thus far. However, the initial barrier appears to be 0.6714, which is ahead of 0.6728 and 0.6759. In contrast, the immediate support is about 0.6574, followed by 0.6558. The RSI dropped below 47.
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