Australian Dollar retreats from intraday gains ahead of Australian CPI and Fed decision

AUD/USD retreats to 0.6990 on Monday, though still up on Friday's close, after briefly rising as high as 0.7011 during the Asian session as investors prepare for key Australian inflation data and the Federal Reserve’s interest-rate decision.

Market sentiment improved after a pause in hostilities between the United States (US) and Iran triggered a sharp decline in Oil prices and a relief rally across global stock and bond markets. West Texas Intermediate (WTI) Oil trades near $83.70 per barrel, falling more than 7% and easing concerns that elevated energy costs could generate additional inflationary pressure. The decline in Oil has also slightly reduced expectations of an immediate Fed rate increase, offering some support to risk-sensitive currencies such as the Australian Dollar.

On Tuesday, investors will monitor a speech from Reserve Bank of Australia Governor Michele Bullock for comments on inflation and the future path of interest rates. In the United States, the ADP Employment Change four-week average will also be released after previously falling to 16.5K. A stronger reading could support the US Dollar, while another decline may reinforce signs that employment growth is moderating.

Attention will then shift to Australia’s June Consumer Price Index on Wednesday. Headline CPI previously declined 0.7% MoM, while annual inflation stood at 4.0%. Trimmed Mean CPI last increased 0.4% MoM and 3.6% YoY, showing that underlying inflation remained elevated despite the decline in the headline measure. Hotter figures for June could strengthen expectations that the RBA will maintain restrictive policy and support the Aussie, while softer inflation could pressure AUD/USD.

The Federal Reserve (Fed) will announce its decision later on Wednesday following its July 28–29 meeting. The Fed has maintained its target range at 3.50%–3.75% since the beginning of the year. Although most analysts expect another hold, the decision is considered increasingly close following recent inflation and energy price spikes. The sharp pullback in Oil on Monday may reduce the urgency for a hike, but Chair Kevin Warsh could maintain a hawkish stance and leave the door open to future tightening.

US Personal Consumption Expenditures (PCE) inflation later in the week will provide another important indication of underlying inflation. The broader calendar also includes decisions from the Bank of England (BoE) on Thursday and the Bank of Japan (BoJ) on Friday .

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6988, holding between the rising 100-period Simple Moving Average (SMA) at 0.6969, which underpins the pair, and the 20-period SMA at 0.6990, which caps the upside. This configuration, together with a Relative Strength Index (RSI) reading near 49, suggests a broadly neutral tone, with price trapped in a tight range and intraday rallies meeting supply just overhead.

On the topside, initial resistance is aligned at the 20-period SMA around 0.6990, followed by the horizontal barrier at 0.6995, ahead of a denser cap near 0.7002 and then 0.7006. On the downside, immediate support emerges at 0.6984, where a horizontal level protects the latest consolidation lows, with the 100-period SMA at 0.6969 providing a deeper technical floor if sellers extend the pullback.

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