- AUD/USD is consolidating in a narrow trading range of 0.7380 – 0.7330 ahead of RBA Gov Lowe Speaks.
- The 50 periods EMA (exponential moving average – red line) is holding around the 0.7420 level.
- Forex trading market participants may sell below the $0.7358 level to target $0.7320 and 0.7287.
The AUD/USD currency pair extended its early-day winning streak and remained well bid heading into the European session. The AUD/USD currency pair was trading with some gains, around the 0.7369 area. The currency pair is consolidating in a narrow trading range of 0.7380 – 0.7330 ahead of RBA Gov Lowe Speaks.
If you are interested in trading AUD/USD with forex robots, check out our guide.
The US stimulus and the easing of the Sino-American tussle are providing solid gains in the currency pair. Thus, It kept the market’s trading sentiment positive. Moreover, the ongoing risk-on mood bolstered the perceived riskier Australian dollar. These are the key factor to support the AUD/USD currency pair. Thus, the pair keeps on trading with a bullish bias near the 0.7335 level on the first day of the new week.
Bullish Bias in US Dollar Drags AUD/USD Lower
On the other hand, the sharp pickup in the US dollar prices could cap gains for the AUD/USD currency pair. The US dollar hit a two-week high during the 1st-half of the trading action on Monday amid expectations for an imminent Fed taper announcement later this year.
The AUD/USD currency pair is trading at 0.7363 and consolidating in the range between 0.7337 and 0.7369. Despite worries about the fast-spreading Delta variant and a global economic slowdown, the market’s trading sentiment maintained its previous upbeat stance and remained well bid on the day.
The market mood was buoyed by the US stimulus and the easing of the Sino-American dispute, according to the progressive chatters. Thus, the prevalent risk-on environment extended some support to the perceptually riskier Australian dollar. This, in turn, was seen as a critical factor that helped the AUD/USD currency pair to find some support near the 0.7335 area on the first day of the new week.
A Quick Economic Events Review
The release of the US Producer Price Index (PPI) further bolstered the uptick in the market’s trading sentiment. Furthermore, the PPI recorded the biggest gain since November 2010 and indicated that higher inflation could persist for some time.
As a result, the benchmark 10-year US government bond yield climbed back closer to 1.35% and pushed the US dollar higher. The robust pickup in the US dollar demand could cap gains for the AUD/USD currency pair. The broad-based US dollar maintained its early-day bullish streak and remained a firm bid on the day.
However, the Fed’s expectations to begin rolling back its massive pandemic-era stimulus sooner rather than later supported the US dollar. The hopes were fueled by Friday’s release of the US Producer Price Index, which registered the biggest gain since November 2010. It indicated that higher inflation could persist for some time.
What’s Next?
In the coming days, market participants will be watching for Chinese macroeconomic data, Australian employment data, and monthly retail sales figures in the United States. It will play a key role in influencing the AUD/USD pair ahead of the crucial FOMC monetary policy meeting on September 2021.
Reserve Bank of Australia Gov Lowe Speaks
Last week, Reserve Bank of Australia governor Philip Lowe startled some analysts by moving forward with a plan. They are looking to reduce the amount of support the bank has been injecting into the economy.
The board confirmed at its monthly meeting that it will now acquire bonds at a rate of $4 billion per week rather than $5 billion. That’s to maintain market interest rates and borrowing costs low. Some economists expected the board to postpone its decision in the face of a severe economic downturn in September.
That postponement was expected due to COVID-19 limitations, putting more than half of the country under lockdown.
AUD/USD Price Forecast – Technical Levels
S3 0.7401
S2 0.7419
S1 0.7428
Pivot Point 0.7436
R1 0.7445
R2 0.7453
R3 0.747
AUD/USD Achieves 61.8% Fibonacci Correction – RBA Gov Lowe Speaks Ahead
The AUD/USD currency pair is consolidating in a narrow trading range of 0.7380 – 0.7330 ahead of the RBA Gov Lowe Speaks. Overall, the AUD/USD price forecast remains bearish below the 50-period EMA. Nevertheless, the 61.8% Fibonacci Retracement level is may provide support to the AUD/USD pair at 0.7358.
On the 4 hour timeframe, the AUD/USD is going lower towards the following support region of 0.7358. The 61.8% Fibonacci retracement level prolonged this support level to the AUD/USD. Recently, the stronger dollar has triggered the bearish breakout on an upward trendline.
Currently, the AUD/USD currency pair is trading at the 0.7363 level. The violation of the 0.7358 trading mark is likely to extend the AUD/USD towards the following support marks of 0.7320 and 0.7287.
Furthermore, if the AUD/USD pair fails to break below the 0.7358 level, it may bounce off above the 61.8% Fibonacci retracement level. On the bullish side, the AUD/USD can be purchased until the 50% and 38.2% retracement levels of 0.7380 and 0.7403 are reached.
Taking a look at the 50 periods EMA (exponential moving average – red line), it is holding around the 0.7420 level. The closing of candles below this level supports a strong selling bias in the AUD/USD currency pair. Moreover, the leading indicator, Stochastic RSI, stays below 50, maintaining the bearish trend in the pair.
With that being said, investors are likely to keep an eye on the 0.7358 level. Therefore, the Forex trading market participants may sell below the $0.7358 level to target $0.7320 and $0.7287. Alternatively, traders can take a buying position above the $0.7355 level today. All the best!
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