Australian Dollar rises as softer Fed bets offset resilient US data
The Australian Dollar (AUD) extends its rally into a third straight trading session, up 0.25% on Monday, as investors adjust their interest rate expectations for the Federal Reserve (Fed) following a soft US jobs report last week. Consequently, the US Dollar (USD) weakened, driving AUD/USD higher to trade at 0.6950 after bouncing off daily lows of 0.6921.
AUD/USD extends rally as Fed bets cool, RBA stays hawkish
Data in the US showed that business activity in the services sector deteriorated slightly, but remained in expansionary territory. The ISM Services PMI for June came in at 54, down from 54.5 but in line with estimates. Within the survey's sub-components, the Prices Index dipped from 71.3 to 67.7, while the Employment Index improved from 47.9 to 51.2.
Fed Waller remains hawkish as US jobs data disappoints
The data paints a resilient US economy, but last week’s softer-than-expected June NFP print triggered a reaction from investors, decreasing hawkish bets. Despite this, Fed Governor Christopher Waller was hawkish, saying that policymakers are always committed to 2% inflation and that risks have flipped as the labor market stabilizes while inflation is taking off.
Ahead in the week, traders are waiting for the Fed’s last meeting minutes, the first led by the new Fed Chair Kevin Warsh, eyeing clues about the path of interest rates. Alongside this, Initial Jobless Claims for the week ending July 4 are also awaited.
RBA minutes don’t disregard rate hikes
In Australia, the Reserve Bank of Australia's (RBA) last meeting minutes indicated that a pause was needed to assess the effect of the previous rate hikes. However, they acknowledged that holding rates provided the best balance to attain inflation and employment objectives. Despite this, the board remains committed to achieving price stability, including increasing rates if necessary.
Consequently, the RBA's hawkish tilt capped some of the AUD/USD initial losses. This week, the economic calendar is light, as traders will eye the release of Westpac Consumer Confidence for July on July 13, followed by the update of Consumer Inflation Expectations for the same period.
AUD/USD Price Forecast: Technical outlook
In the daily chart, AUD/USD trades at 0.6955. The pair retains a bearish near-term bias as spot holds below the cluster of simple moving averages (50-, 100- and 200-day SMA) grouped around 0.7091 and under several previously respected upward trend-line levels, indicating that former structural supports have turned into overhead supply. The Relative Strength Index (14) at about 43 leans weak, suggesting downside pressure persists even as the latest slide shows a modest loss of momentum rather than a sharp capitulation.
On the topside, initial resistance emerges near the broken long-term trend-line area around 0.7002, with a denser cap formed by the overlapping former trend-line supports and the SMA cluster between roughly 0.7086 and 0.7111, which would need to be reclaimed to ease the current bearish tone. With no clearly defined structural floors immediately below current prices in the provided dataset, any further decline would leave AUD/USD vulnerable to discovering fresh demand at lower levels, keeping risks tilted to the downside while it trades beneath the cited resistance band.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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