AUD/USD Forecast: immediately to the upside comes 0.6870

• 
  AUD/USD
  rose
  to
  the
  boundaries
  of
  the
  0.6800
  barrier.
• 
  The
  Greenback
  collapsed
  post-US
  CPI
  data.
• 
  Australian
  Consumer
  Inflation
  Expectations
  dropped
  in
  July.

Another
robust
session
saw
AUD/USD
continue
its
upward
movement,
this
time
coming
in
just
pips
away
of
the
0.6800
milestone
on
Thursday,
extending
its
positive
streak
for
the
third
day.

The
pair’s
consecutive
increase
was
propelled
by
extra
weakness
in
the
US
Dollar
(USD),
especially
after
US
inflation
readings
came
in
below
expectations
in
June,
which,
at
the
same
time,
added
to
speculation
of
a
potential
interest
rate
cut
by
the
Fed
as
soon
as
September.

The
above
remained
in
contrast
to
the
latest
comments
from
Chair
Jerome
Powell’s
testimonies
before
Congress,
where
he
took
a
cautious
approach
regarding
the
potential
timing
of
a
Fed
interest
rate
cut,
stating
that
more
evidence
of
inflation
moving
towards
the
target
is
required
before
any
rate
adjustments
are
made.

On
another
front,
daily
retracements
of
both
copper
and
iron
ore
prices
seem
to
have
limited
the
upside
impetus
in
the

Aussie
dollar.

Regarding
monetary
policy,
both
the
Reserve
Bank
of
Australia
(RBA)
and
the

Federal
Reserve
(Fed)
are
expected
to
be
among
the
last
G10
central
banks
to
begin
cutting
interest
rates.

At
its
latest
meeting,
the
RBA
maintained
a
hawkish
stance,
keeping
the
official
cash
rate
at
4.35%
and
indicating
flexibility
for
future
decisions.
The
meeting
minutes
revealed
that
the
decision
to
hold
the
policy
rate
was
mainly
due
to
“uncertainty
around
consumption
data
and
clear
evidence
of
financial
stress
among
many
households.”

The
RBA
is
not
in
a
hurry
to
ease
policy,
anticipating
that
it
will
take
some
time
before
inflation
consistently
falls
within
the
2-3%
target
range.
There
is
approximately
a
25%
chance
of
a
rate
cut
in
August,
increasing
to
around
50%
in
the
following
months.

Additionally,
potential
easing
by
the
Fed,
contrasted
with
the
RBA’s
likely
prolonged
restrictive
stance,
could
support
AUD/USD
in
the
upcoming
months.

However,
concerns
about
slow
momentum
in
the
Chinese
economy
might
hinder
a
sustained
recovery
of
the
Australian
currency
as
China
continues
to
face
post-pandemic
challenges.
In
addition,
the
persistent
lack
of
traction
in
Chinese
inflation
could
lead
to
some
stimulus
from
the
People’s
Bank
of
China
(PBoC),
which
could
eventually
morph
into
some
sort
of
support
for
AUD.

Meanwhile,
in
Oz,
Consumer
Inflation
Expectations
dropped
to
4.3%
in
July
(from
4.4%),
according
to
the
Melbourne
Institute.
Despite
the
drop,
the
gauge
remains
well
above
the
RBA’s
2%–3%
target
band.

AUD/USD
daily
chart

AUD/USD
short-term
technical
outlook

If
bulls
push
higher
and
AUD/USD
clears
the
July
high
of
0.6798
(July
8),
it
might
test
the
December
2023
top
of
0.6871,
followed
by
the
July
2023
peak
of
0.6894
(July
14),
all
before
the
key
0.7000
barrier.

Bearish
attempts,
on
the
other
hand,
may
drive
the
pair
lower,
first
to
the
June
low
of
0.6574
(June
10)
and
subsequently
to
the
key
200-day
SMA
of
0.6569.
A
further
decline
might
result
in
a
return
to
the
May
low
of
0.6465
and
the
2024
low
of
0.6362
(April
19).

Overall,
the
uptrend
should
continue
as
long
as
the
AUD/USD
remains
above
the
200-day
SMA.

The
4-hour
chart
shows
an
acceleration
of
the
upside
momentum.
That
said,
0.6798
appears
to
be
the
first
barrier,
ahead
of
0.6871.
On
the
other
side,
0.6709
provides
quick
support,
prior
to
the
100-SMA
of
0.6688.
The
RSI
dropped
to
roughly
61.