Published on Jul 18, 2023

AUD/USD Price Analysis: Consolidation Phase above 0.6800- 18-07-2023

AUD/USD Analysis

Key Points: -

The AUD/USD pair is trading in a sideways manner, consistently remaining above the 0.6800 level as investors eagerly anticipate the release of US Retail Sales data.
Despite the Reserve Bank of Australia (RBA) minutes stating the need for further interest rate hikes, the Australian Dollar (AUD) has struggled to gain momentum and find significant market activity.
S&P500 futures have recorded minor losses in Asia, reflecting a sense of caution and hesitation among market participants.

Today's Scenario: -

The AUD/USD pair remains in a sideways pattern above the key support level of 0.6800 during the Tokyo session. Despite the Reserve Bank of Australia (RBA) minutes stating the need for further interest rate hikes, the Australian Dollar (AUD) has struggled to gain momentum and attract significant market activity.

During the RBA's monetary policy meeting in July, policymakers leaned towards a positive outlook for the Australian economy and decided to keep interest rates unchanged. However, weak consumer spending and a GDP growth rate of approximately 0.2% in the second quarter indicated the consequences of the aggressive policy tightening measures.

It's important to note that there is a notable divergence between the interest rate hikes implemented by the RBA and those of other developed economies, providing room for potential future rate increases.

Investors will closely watch Australia's Employment data, which is scheduled for release on Thursday at 01:30 GMT. The consensus forecast suggests a smaller addition of payrolls at 17,000, significantly lower than the previous release of 75,900. The Unemployment Rate is expected to remain stable at 3.6%.

In the Asian market, S&P500 futures have posted minor losses, reflecting caution among market participants. US equities experienced decent gains on Monday as investors hope that the Federal Reserve (Fed) has limited options for further interest rate hikes to control inflation.

The US Dollar Index (DXY) has retraced near its crucial support level of 99.75 after failing to sustain its position above the psychological resistance level of 100.00. The upcoming United States Retail Sales data for June, scheduled to be published at 12:30 GMT, will likely trigger further movement in the US Dollar Index.

Diagram of AUD/USD: -

Economic Events: -

Buy Scenario: -

On the upside, the first resistance level is positioned at 0.6900, which is a significant resistance level based on previous price swings. This level may act as a barrier, causing the price to encounter selling pressure. If the price successfully breaks above this resistance, it could target the second resistance level at 0.6982. This level is also noteworthy as it aligns with the 61.80% Fibonacci projection. Till we do not advise to buy AUD/USD.

Sell Scenario: -

The AUD/USD pair is currently exhibiting a bullish momentum. In this scenario, there is potential for the pair to experience a bullish bounce off the first support level and move towards the first resistance level.

The first support level is located at 0.6794, which is considered an overlap support and coincides with the 38.20% Fibonacci retracement level. If the price retreats to this level, it is expected to encounter strong buying interest, leading to a potential upward movement. However, if the first support level is breached, the price may further decline towards the second support level at 0.6718. This level is identified as a pullback support and aligns with the 61.80% Fibonacci retracement level. Till we do not advise to sell AUD/USD.