AUD/USD pulls back from three-year high; holds above mid-0.7000s ahead of US Retail Sales

AUD/USD drifts lower as weak Australian consumer sentiment backs March RBA pause.
The Fed-inspired USD weakness could support the major amid the risk-on environment.
Traders now look to U.S. retail sales and speeches from Fed officials for a fresh impetus.

Haresh Menghani FXStreet

The AUD/USD pair attracts some sellers on Tuesday, eroding part of the previous day's strong move up to the 0.7100 mark or a three-year high and snapping a two-day winning streak. Spot prices slide to a fresh daily low, around the 0.7065 area, during the early European session, though the broader fundamental backdrop warrants some caution before positioning for deeper losses.

Westpac and the Melbourne Institute’s consumer sentiment index fell for the third month, reflecting pressure on household spending and strengthening the case for the Reserve Bank of Australia (RBA) to pause in March. This, in turn, prompts profit-taking around the Australian Dollar (AUD) and exerts some downward pressure on the AUD/USD pair. Meanwhile, traders are still pricing in the possibility of an RBA rate hike in May amid sticky inflation, which, along with the upbeat market mood, could limit losses for the risk-sensitive Aussie.

The US Dollar (USD), on the other hand, remains depressed amid the growing acceptance that the US Federal Reserve (Fed) will lower borrowing costs at least two more times in 2026. Adding to this, concerns about the central bank's independence keep the USD bulls on the defensive. Furthermore, signs of easing tensions in the Middle East further undermine the Greenback's safe-haven status amid the broader de-dollarization trend. This backs the case for the emergence of some dip-buyers around the AUD/USD pair and warrants caution for bears.

Market participants now look to Tuesday's release of the monthly US Retail Sales data, which, along with Fedspeak, would drive the USD later during the North American session. The focus, however, will remain glued to the closely-watched US employment details – popularly known as the Nonfarm Payrolls (NFP) on Wednesday. Apart from this, the US consumer inflation figures on Friday should provide more cues about the Fed's rate-cut path. This, in turn, will influence the USD price dynamics and provide some meaningful impetus to the AUD/USD pair.

Economic Indicator

Retail Sales (MoM)

The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Monthly percent changes reflect the rate of changes in such sales. A stratified random sampling method is used to select approximately 4,800 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms across the country. The data is adjusted for seasonal variations as well as holiday and trading-day differences, but not for price changes. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.