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  • AUD/USD hangs in balance while carrying the bounce off 0.7730 to reverse early-Monday’s losses.
  • US dollar weakness, gold run-up backed the bulls of late, market sentiment stay sluggish.
  • Inflation concerns remain elevated amid mixed data from China, US and repeated Fedspeak.
  • RBA minutes will be watched for July action hints, risk catalysts are also the key.

AUD/USD steps back to 0.7760, following a bounce to revisit the week-start levels, during the early Tuesday morning in Asia. Despite a dull start to the week, amid no clear market direction and consolidation mode after Friday’s heavy optimism, US dollar weakness and gold’s run-up backed the pair buyers ahead of the key RBA meeting minutes. Though, recent challenges to trading sentiment seem to weigh on the quote.

RBA vouches for July”¦

Although Aussie data have been upbeat of late, the Reserve Bank of Australia (RBA) considered inflation as subdued and preferred waiting until July to review the current monetary policy in the latest meeting. It should, however, be noted that the inflation problem also prevails in China and the US and hence July meeting will be interesting for AUD/USD while today’s minutes signal upside risk should Lowe & Co. reiterate their cautious optimism.

Looking backward, the AUD/USD prices began the week mostly unchanged but lost upside momentum during early Monday after China flashed downbeat Retail Sales and Industrial Production growth. The geopolitical tension in Gaza and consolidation of the previous gains, not to forget chatters over the Aussie-China tussle, also magnified the pair’s weakness.

However, the US session brought the greenback towards a fresh three-month low and recalled the AUD/USD buyers. A mixed play of the sluggish NY Empire State Manufacturing Index and the Fed policymakers’ sustained rejection of tapering talks seem to have triggered the US dollar index (DXY) drop, also likely fuelled gold prices to early February high.

Amid these plays, Wall Street closed mixed and the US 10-year Treasury yields gained 1.7 basis points (bps) to define the uninteresting day.

Moving on, AUD/USD traders should take note of the headlines from Gaza and trade news as the US is pushing for peace between Israel and Palestine while the UK government is split over a trade deal with Australia. Above all, the RBA minutes will be the key event for AUD/USD in Asia.

Technical analysis

AUD/USD remains sideways unless crossing the 0.7820-0.7710 region. Wherein the multiple tops marked since January defines the range resistance while a confluence of 50-day and 100-day SMA portrays the 0.7720-10 support area.


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