- AUD/USD comes under renewed downside pressure.
- The US Dollar maintains its constructive outlook.
- US and Chinese inflation data and the FOMC event come next.
The persevering rise in the US Dollar (USD) this time weighed on the Australian dollar, forcing AUD/USD to give away part of Monday’s optimism and put the 0.6600 zone to the test once again on turnaround Tuesday.
The greenback's rebound was primarily fueled by heightened caution and renewed political worries in Europe following Sunday's parliamentary elections, all along with usual steady prudence ahead of the release of US inflation figures and the interest rate decision by the Federal Reserve (Fed), all expected on June 12.
Adding to the ongoing cautious stance, China will also release its CPI and Producer Prices prints early on Wednesday.
Additionally, extra weakness on the Aussie dollar came from the corrective decline in both copper and iron ore prices.
In terms of monetary policy, the Reserve Bank of Australia (RBA), like the Fed, remains one of the last major central banks to adjust its stance. Recent RBA Minutes indicated that officials are even considering the possibility of interest rate hikes if inflation rises.
Currently, money markets are predicting about 25 bps of easing by July 2025, with potential rate hikes still possible in August and September. Supporting this outlook, the RBA's Monthly CPI Indicator (Weighted Mean CPI) increased more than expected in April, rising to 3.6% from 3.5%.
Given the Federal Reserve's commitment to tightening and the likelihood that the RBA will maintain its restrictive stance for an extended period, AUD/USD is expected to further consolidate in the coming months.
On the Australian docket, Business Confidence gauged by NAB worsened to -3 in May (from 2).
AUD/USD daily chart
AUD/USD short-term technical outlook
Occasional bearish attempts may push AUD/USD towards the key 200-day SMA of 0.6539, ahead of the May low of 0.6465 and the 2024 bottom of 0.6362 (April 19).
The resumption of the upside bias may encourage spot to revisit the May peak of 0.6714 (May 16), followed by the December 2023 high of 0.6871 and the July 2023 top of 0.6894 (July 14), all before the critical 0.7000 level.
Overall, gains are likely if the price remains above the 200-day SMA.
The 4-hour chart shows some near-term consolidation for the time being. That said, immediate support occurs at 0.6574 before 0.6557. On the upside, the 200-SMA is at 0.6615, followed by 0.6698 and 0.6709. The RSI slipped back to around 40.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
![EUR/USD holds near 1.1100, looks to post small weekly gains](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-9377516_XtraSmall.jpg)
EUR/USD holds near 1.1100, looks to post small weekly gains
EUR/USD trades near 1.1100 in the American session on Friday. Although the risk-averse market atmosphere caps the pair's upside, dovish comments from Fed officials and the disappointing US jobs report help it hold its ground.
![GBP/USD retreats to 1.3150 area after post-NFP spike](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1178148633_XtraSmall.jpg)
GBP/USD retreats to 1.3150 area after post-NFP spike
GBP/USD turns south and declines to 1.3150 area after spiking to 1.3240 in the early American session. The negative shift seen in risk mood following the US labor market data for August helps the US Dollar stay resilient against its peers and weighs on the pair.
![Gold pulls away from near record highs, holds above $2,500](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/Gold_Bar_XAU_Precious_Metal_XtraSmall.jpg)
Gold pulls away from near record highs, holds above $2,500
Gold came within a touching distance of a new all-time high near $2,530 as US Treasury bond yields turned south on disappointing US jobs data. The US Dollar's resilience amid a souring risk mood, however, caused XAU/USD to erase its daily gains.
![Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoins-37949586_XtraSmall.jpg)
Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs
Bitcoin, Ethereum, and XRP hover around key support levels after registering a steep correction earlier this week. TRON network’s stablecoin activity hit new highs following the release of SunPump.
![Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/us-job-hunter-8793311_XtraSmall.jpg)
Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report
The Nonfarm Payrolls report is forecast to show that the US economy added 160,000 jobs in August, after creating 114,000 in July. The Unemployment Rate is likely to dip to 4.2% in the same period from July’s 4.3% reading.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.