Australian Dollar Outlook: AUD/USD
AUD/USD seems to be defending the rebound from the monthly low (0.6415) as it retraces the decline from earlier this week, but the exchange rate may consolidate over the remainder of the month should it track the flattening slope in the 50-Day SMA (0.6514).
Australian Dollar Forecast: AUD/USD Defends Rebound from Monthly Low
Keep in mind, AUD/USD slipped to a fresh weekly low (0.6463) even though Australia’s Consumer Price Index (CPI) printed at 2.9% in July versus forecasts for a 2.3% reading, and thin market conditions may generate whipsaw-like price action in foreign exchange markets as participation is likely to wane ahead of the major US holiday on September 1st.
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Nevertheless, signs of persistent inflation may push the Reserve Bank of Australia (RBA) to the sidelines following the 25bp rate cut at the August meeting, and the central bank may adopt a wait-and-see approach as the ‘Board will be attentive to the data and the evolving assessment of risks to guide its decisions.’
With that said, narrowing expectations for back-to-back RBA rate cuts may keep AUD/USD afloat as it bounces back ahead of the June low (0.6373), but the exchange rate may track the flattening slope in the 50-Day SMA (0.6514) if it struggles to retrace the decline from the monthly high (0.6569).
AUD/USD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; AUD/USD on TradingView
- AUD/USD continues to hold above the June low (0.6373) as it retraces the decline from earlier this week, and a move/close above the 0.6510 (38.2% Fibonacci retracement) to 0.6550 (61.8% Fibonacci retracement) zone may lead to a test of the monthly high (0.6569).
- A breach of the July high (0.6625) opens up the November high (0.6688), with the next area of interest coming in around 0.6720 (78.6% Fibonacci retracement).
- However, lack of momentum to push/close above the 0.6510 (38.2% Fibonacci retracement) to 0.6550 (61.8% Fibonacci retracement) zone may push AUD/USD back toward the monthly low (0.6415), and failure to hold above the June low (0.6373) may lead to a test of the May low (0.6357).
Additional Market Outlooks
Gold Price Falls Toward Monthly Low Ahead of Fed Symposium
Canadian Dollar Forecast: USD/CAD Rises amid Slowing Canada Inflation
GBP/USD Recovery Curbs Threat of Head-and-Shoulders Formation
US Dollar Forecast: EUR/USD Eyes Monthly High
--- Written by David Song, Senior Strategist
Follow on X at @DavidJSong
