AUD/USD is at a key support area above 0.6500 with US Retail Sales, Fed speakers on tap

• The Aussie is under increasing bearish pressure amid the unfavorable risk environment
• Hawkish Fed rhetoric is prompting investors to reassess Fed easing expectations and boosting the US Dollar.
• A string of weak Chinese data has increased bearish pressure for the Aussie.
   

Aussie is trading under strong selling pressure. The pair has lost more than 4% so far in January to reach a key support area at the 0.6520/40 range with all eyes on the US Retail Sales data.

US Consumption is expected to have grown 0.4% in December, up from the 0.3% increase seen in November. After that, a slew of Fed policymakers are crossing wires.

Fed speakers are likely to support the US Dollar

Fed speakers are likely to endorse the view of their colleagues, who have warned that is too early to consider rate cuts, with inflation well above the 2% rate of price stability. These comments, mixed with the risk-off environment amid concerns that the situation in the Red Sea will strangle global trade, are underpinning support for the safe-haven Dollar.

Beyond that, data from China, a key Australian partner disappointed earlier today. The Gross Domestic Product grew at a 5.2% pace below expectations of 5.3% and retail sales went 7.4% up below the 8% market consensus and well below November’s 10.1% increase.

These figures revive investors' concerns about the anemic post-COVID recovery in China and cast doubt on Australia’s economic outlook, ultimately increasing negative pressure on the Aussie.

In Australia, recent data has shown that consumer confidence deteriorated in January, which has increased negative pressure on the Aussie.

Technical levels to watch