AUD/USD Forecast: Insufficient rebound, still under pressure

AUD/USD Current Price: 0.6550

• The AUD/USD pair rebounded after hitting monthly lows but remains under pressure.
• It is currently trading close to the 0.6500 area, with a bearish bias.
• Friday is expected to be busy with the release of the RBA statement and the NFP report.

On Thursday, the AUD/USD rose modestly after hitting its lowest level since June 1 at 0.6514. The move higher was driven by a slight decline in the US Dollar amid cautious markets ahead of the US official employment report, while lower commodity prices continue to weigh on the Aussie.

Australia reported weak trade data, with a 2% decline in exports and a 4% decrease in imports for June. The annual rate of exports stood at -10.8%, the lowest since October 2020. A different report showed that Retail Sales came in as expected, with a 0.5% decline during the second quarter.

After keeping rates unchanged on Tuesday, the Reserve Bank of Australia (RBA) will release its Monetary Policy Statement on Friday, which includes the bank's assessment of the economy and the outlook on growth and inflation.

US data released on Thursday came in mixed. Initial Jobless Claims rose to 227,000 for the week ended July 29, as expected. Q2 Unit Labor Costs showed softer inflation pressures with a 1.6% increase below the expected 2.6%, and Q1 was revised from 4.2% to 3.3%. Factory Orders rose by 2.3% in June, in line with expectations, while the ISM Services PMI declined from 53.9 to 52.7, below the estimated 53.

The US Dollar pulled back modestly after Wednesday’s rally, but remains supported by US economic data. On Friday, the Nonfarm Payroll report will be released, which could trigger actions and potentially boost the Greenback further or favor a decline. At the same time, cautious markets and lower commodity prices continue to keep the Aussie under pressure.

AUD/USD short-term technical outlook

The AUD/USD rose modestly on Thursday but remains under pressure, with the key support level of 0.6500 in sight. The bias remains to the downside. Technical indicators on the daily chart offer some hope for the bulls, as the Relative Strength Index (RSI) and Momentum indicators are starting to turn positive, but this will need confirmation.

On the 4-hour chart, the bias is clearly to the downside. However, with the RSI starting to move higher from oversold levels and after a sharp decline, some consolidation ahead of the NFP report seems likely. The Aussie needs to rise above 0.6600 to improve its short-term outlook. On the contrary, if it drops below 0.6525, a test of the 0.6500 zone seems likely, with attention then turning to the May low near 0.6460. A slide below this level would indicate further losses, potentially exposing 0.6400.

Support levels: 0.6525 0.6495  0.6460

Resistance levels: 0.6560 0.6600 0.6640

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