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AUD Falls Ahead of Australia's Inflation Report
Traders' Opinions
Summary:
The Australian Dollar came under renewed pressure on Tuesday after Reserve Bank of Australia Governor Michele Bullock warned that the economy is slowing faster than expected even as inflation remains stubbornly high.
Sell
TradingAUDUSD
EXP
0.69650
Entry Price
0.67500
TP
0.70500
SL
0.69723 -0.00005 -0.01%
0
Point
Flat
0.67500
TP
CLOSING
0.69650
Entry Price
0.70500
SL
The Australian Dollar came under pressure during Tuesday's European session after Reserve Bank of Australia Governor Michele Bullock struck a cautious tone on the economic outlook, raising concerns that slowing growth and persistent inflation could complicate future monetary policy decisions.
AUD/USD slipped around 0.35% to trade near 0.6965 after Bullock said economic activity and the housing market are cooling more than expected, while stressing that further interest rate hikes remain possible if inflation fails to ease. Although she offered no clear guidance for the next policy meeting, her remarks highlighted the difficult balancing act facing the RBA.
Bullock's comments have increased concerns that Australia could face a period of weaker growth alongside stubborn inflation, limiting investor appetite for the Australian Dollar.
Attention now turns to Wednesday's Australian CPI report, with annual inflation expected to remain elevated around 4.1% in the second quarter. Investors will also closely watch the Federal Reserve's policy announcement, where interest rates are widely expected to remain unchanged. However, any hawkish signals from Fed Chair Kevin Warsh could provide further support for the US Dollar and keep pressure on AUD/USD.
Technical Analysis
AUD/USD is beginning to lose its footing after failing to sustain gains within its ascending channel, with sellers gradually regaining control following repeated rejections from the 61.8% Fibonacci retracement near 0.7005. The inability to establish a foothold above the psychological 0.7000 level suggests bullish momentum is fading, while the latest move below the 50% Fibonacci retracement reinforces the risk of a deeper correction.
The 0.6975–0.6980 area, which previously acted as a key support zone, has now turned into immediate resistance. Unless buyers reclaim this level, the path of least resistance remains tilted to the downside. A sustained break beneath the current support around 0.6965 would confirm the bearish shift and expose the 0.6867 Fibonacci support. If selling pressure accelerates below that floor, the next downside objectives come into view near 0.6807, followed by the 0.6747 extension level highlighted on the chart.
On the other hand, bulls need to regain control above the 0.6978 and 0.7005 Fibonacci levels to invalidate the immediate bearish outlook. A convincing move through those barriers would suggest the recent decline was merely a pullback within the broader recovery, bringing 0.7040 and eventually 0.7090 back into focus.
Momentum studies continue to favor the sellers. The RSI has slipped below the neutral 50 level, reflecting weakening buying interest and an increase in bearish momentum. Meanwhile, MACD has completed a bearish crossover below the zero line, with expanding negative histogram bars indicating that downside momentum is strengthening. Unless momentum indicators begin to stabilize, rallies are likely to attract fresh selling rather than signal a lasting reversal.
TRADE RECOMMENDATION
SELL AUD/USD
ENTRY PRICE: 0.6965
STOP LOSS: 0.7050
TAKE PROFIT: 0.6750
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