The US Dollar was trading broadly weaker on Monday, with the AUD/USD pair attempting a rebound to currently trade back around 100-day SMA region and inching closer to 0.7500 handle.
Last week the pair witnessed an intense selling pressure after RBA minutes that opened doors for further rate-cut in the near-future in order to support the economy and eliminated deflationary pressure. Hence, this week Australian CPI report on Wednesday would be crucial to determine if RBA would go ahead and cut interest rates in August.
Meanwhile, the incoming US economic data continues to revive hopes of an imminent Fed rate-hike later during this year, which has been the key factor supporting the ongoing bullish sentiment surrounding the US Dollar and also increases the importance of this week's FOMC meeting. The CME group's Fed Fund rate futures are pricing-in around 40% probability of such an action in December.
From technical perspective, any near-term recovery is seen capped at 100-day SMA just below 0.7500 handle. Hence, only a strong buying interest seems to assist the pair to stage any additional recovery from current levels.
Technical levels to watch
On the upside, 0.7500-0.7515 region seems to act as immediate strong resistance, above which the pair is likely to extend the recovery trend towards 0.7565 horizontal resistance before heading towards its next major resistance near 0.7600-0.7610 area. Meanwhile on the downside, 0.7450-40 region has now emerged as immediate support, which if broken is likely to drag the pair immediately towards 50-day SMA support near 0.7410-0.7400 region.
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