• AUD/USD recaptures the critical 0.70 handle this week.
  • Upbeat trade data from China and broad USD weakness boost the pair.
  • Coming up early next week: Chinese industrial production and GDP data and RBA minutes.

The AUD/USD pair started the week under a modest pressure as last Friday's upbeat employment allowed the greenback to continue to gather strength. After slumping to its lowest level in more than two weeks at 0.6909 on Wednesday, however, the pair staged a rebound and rose above the critical 0.70 mark. 

The data published on Tuesday showed that the National Australia Bank's Business Confidence Index dropped to 2 in June from 7 in May. Furthermore, the Westpac Consumer Confidence Index slumped to -4.1% in July from -0.6% to reveal a deteriorating consumer sentiment. On a positive note, home loans, which were expected to contract by 0.6% on a monthly basis in May, stayed flat. More importantly, the data from China on Friday showed that the trade surplus widened to $50.98 billion in June to beat the market expectation of $44.65 billion by a wide margin and provided a boost to antipodeans. 

On the other hand, FOMC Chairman Powell during his semi-annual testimony before the Congress on Wednesday acknowledged the negative impact of uncertainties surrounding the trade policy and the global economic outlook and reiterated that the Fed will act 'as appropriate' to sustain the U.S. economic growth to make it difficult for the greenback to preserve its strength.

Although the U.S. Bureau of Labor Statistics monthly inflation report, which showed that the core Consumer Price Index in June ticked up to 2.1% to surpass analysts' estimate of 2%, helped the dollar limit its losses, the US Dollar Index closed the week modestly lower.

When the markets return to action on Monday, investors will be paying close attention to the macroeconomic data releases from China that include retail sales, industrial production, and the second quarter GDP growth. On Tuesday, the Reserve Bank of Australia is scheduled to publish the minutes of its July meeting, at which the bank decided to cut its policy rate by 25 basis points. RBA Governor earlier this month said that they were prepared to adjust the interest rates again if needed and markets will be looking for clues on the timing of the next rate cut.  Later in the week, on Thursday, labour market data from Australia will also be looked upon for fresh impetus. On the flip side, the U.S. economic docket will feature retail sales figures and FOMC Chairman Powell's speech on Tuesday.

AUD/USD Technical Outlook

Technically, the weekly chart points to a neutral outlook with the Relative Strength Index (RSI) staying close to the 50 mark. However, the pair seems to be having a difficult time rising above the 20-week moving average for the second straight week, suggesting that buyers haven't been able to take control of the pair yet. 

Looking at the daily chart, the bullish picture becomes more clear with both the RSI and the Momentum indicators confirming this view. Moreover, the pair continues to move away from the 20-day moving average, which is also turning north on the same chart. 

The initial resistance on the upside could be seen at 0.7025 (100-day moving average) ahead of 0.7090 (200-day moving average) and 0.7205 (Apr. 17 high). On the other side, 0.7000 (psychological level) aligns as the first support followed by 0.6950 (20-day moving average) and 0.6830 (Jun. 18 low).

AUD/USD sentiment poll

According to the FXStreet Forecast Poll, following this week's modest rebound, markets are indecisive regarding the pair's next short-term direction. On a one-month view, however, the majority of participants see the pair trading below the critical 0.70 mark.  

Looking at the Overview chart, a large portion of the experts expect the pair to continue to push lower toward 0.69 and 0.68 while a handful of them look to see prices above 0.71 in the next month or so. 

Related Forecasts

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD: Trapped in a bull flag on 4H chart

EUR/USD's pullback from Oct.21's high of 1.1179 to 1.1106 has taken the shape of a bull flag on the 4-hour chart. A bull flag represents a pause which usually refreshes higher. A breakout would open the doors for 1.1320. A 4-hour close above 1.1134 would confirm a flag breakout.

EUR/USD News

GBP/USD: Modestly changed to 1.2915 amid fears of UK election

Despite mounting speculations of a general election in the UK, GBP/USD clings to 1.2915 during early Thursday morning in Asia. No major British data highlights the US economic calendar, trade/Brexit news as the key catalysts.

GBP/USD News

USD/JPY declines to 108.60 amid fresh risk aversion, all eyes on the ECB

With the recent uncertainty surrounding the UK’s politics crossing wires, USD/JPY steps back from the previous rise to 108.60 as Tokyo opens for Thursday’s trading session.

USD/JPY News

ECB Preview: Draghi's defense of his legacy may drag EUR/USD down

"The ECB is ready to do whatever it takes to preserve the euro." These famous words by Mario Draghi, President of the European Central Bank, are the centerpiece of his legacy.

Read more

Gold drops to $1,491 despite downbeat catalysts from Asia, Brexit uncertainty

Despite economic challenges from Asia and uncertainty surrounding the Brexit, Gold prices step back to $1,491 amid Asian session on Thursday. An active economic calendar, including ECB, will be the key.

Gold News

Forex Majors

Cryptocurrencies

Signatures