AUD/USD Forecast: Constructive bias persists above the 200-day SMA

• 
  AUD/USD
  maintained
  its
  bullish
  stance
  well
  in
  place
  above
  0.6700.
• 
  The
  US
  Dollar
  traded
  on
  the
  defensive
  ahead
  of
  US
  CPI.
• 
  Australian
  Consumer
  Inflation
  Expectations
  come
  on
  Thursday.

Another
firm
session
saw

AUD/USD
extend
its
advance
further
north
of
the
0.6700
barrier
on
Wednesday,
adding
to
Tuesday’s
gains
and
trading
closer
to
recent
monthly
highs
in
the
0.6760-0.6765
band
(July
8).

The
pair’s
second
uptick
in
a
row
was
driven
by
an
incipient
weakness
in
the
US
Dollar
(USD),
as
investors
parsed
Chief
Jerome
Powell’s
second
semi-annual
testimony
before
Congress.
On
this,
Powell
adopted
a
cautious
stance
on
the
potential
timing
of
a
Federal
Reserve
(Fed)
interest
rate
cut,
indicating
that
more
evidence
of
inflation
trending
towards
the
target
is
necessary
before
making
any
rate
adjustments.

In
a
more
domestic
scenario,
the
Australian
dollar’s
uptick
was
influenced
by
some
signs
of
life
in
copper
and
iron
ore
prices,
which
managed
to
dissipate
part
of
the
recent
bearishness.

In
terms
of
monetary
policy,
the
Reserve
Bank
of
Australia
(RBA),
like
the

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

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

Overall,
the
RBA
is
in
no
rush
to
ease
policy,
expecting
that
it
will
take
some
time
before
inflation
is
sustainably
within
the
2-3%
target
range.
There
is
approximately
a
25%
probability
of
a
rate
reduction
in
August,
rising
to
around
50%
in
the
subsequent
months.

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

However,
concerns
about
sluggish
momentum
in
the
Chinese
economy
might
impede
a
sustained
recovery
of
the
Australian
currency
as
China
continues
to
face
post-pandemic
challenges.
Something
to
bear
in
mind
is
the
persistent
lack
of
traction
in
Chinese
inflation,
which
could
eventually
morph
into
some
sort
of
stimulus
from
the
PBoC.
According
to
latest
data,
the
Inflation
Rate
in
China
rose
by
0.2%
in.
the
year
to
June
and
contracted
by
0.2%
vs.
the
previous
month.
Furthermore,
Producer
Prices
contracted
by
0.8%
from
a
year
earlier.

AUD/USD
daily
chart

AUD/USD
short-term
technical
outlook

If
bulls
push
further
and
AUD/USD
clears
the
July
high
of
0.6761
(July
8),
it
might
challenge
the
December
2023
top
of
0.6871,
followed
by
the
July
2023
peak
of
0.6894
(July
14),
all
ahead
of
the
critical
0.7000
barrier.

Bearish
attempts,
on
the
other
hand,
might
push
the
pair
lower,
first
to
the
June
low
of
0.6574
(June
10)
and
then
to
the
important
200-day
SMA
of
0.6567.
A
further
dip
might
result
in
a
return
to
the
May
low
of
0.6465
and
the
2024
bottom
of
0.6362
(April
19).

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

The
4-hour
chart
reveals
that
the
pair
is
trapped
inside
a
consolidative
range.
However,
0.6761
looks
to
be
the
early
obstacle,
ahead
of
0.6871.
On
the
other
hand,
0.6709
offers
immediate
support,
ahead
of
the
55-SMA
of
0.6703.
The
RSI
eased
to
approximately
58.