Australian Dollar holds above 0.7000 as US Retail Sales lose momentum

AUD/USD trades slightly higher near the 0.7010 area on Thursday, extending its recent recovery as the US Dollar (USD) struggles to gain sustained momentum following mixed United States (US) economic data.

US Initial Jobless Claims declined to 208K in the week ending July 11, below expectations of 217K and the previous 216K. The figures suggest that layoffs remain limited and that the US labor market continues to show resilience.

However, US Retail Sales increased only 0.2% MoM in June, matching expectations but slowing sharply from the previous 1.0% rise. The Retail Sales Control Group also grew 0.5%, in line with forecasts but below May’s 0.8% increase. The slowdown in consumer spending limited demand for the Greenback and helped AUD/USD remain above the 0.7000 psychological level.

In Australia, Consumer Inflation Expectations declined to 4.7% in July from 5.5% previously. The fall suggests that household inflation concerns are easing, although it could also reduce pressure on the Reserve Bank of Australia (RBA) to maintain a hawkish monetary-policy stance.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7011, maintaining a bullish near-term tone as it holds above both the 20-period Simple Moving Average (SMA) at 0.6972 and the 100-period SMA at 0.6929. The pair is pressing into overhead supply, with nearby resistance at 0.7013 and a higher cap at 0.7021, while the Relative Strength Index (RSI) hovers just below the overbought threshold around 69.6, hinting that upside momentum is strong but increasingly stretched.

On the downside, initial support is seen at 0.7001, followed by a minor floor at 0.6996 that guards the short-term bullish structure above the 20-period SMA at 0.6972. A deeper pullback would expose the 100-period SMA at 0.6929 as a more significant technical base, while sustained trading above 0.7013 and 0.7021 would open the door for the next leg higher in the broader recovery.

(The technical analysis of this story was written with the help of an AI tool. Know more.)