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Australian Dollar Corrects as Bulls Prepare for Another Push Higher
Traders' Opinions
Summary:
AUD/USD is correcting toward 0.7210, but the pullback appears corrective within a broader bullish structure. Once the correction stabilizes, the pair could resume its advance, with US CPI and RBA commentary providing the next catalysts.
Buy
TradingAUDUSD
EXP
0.72157
Entry Price
0.73400
TP
0.71200
SL
0.72228 +0.00075 +0.10%
0
Point
Flat
0.71200
SL
CLOSING
0.72157
Entry Price
0.73400
TP
The Australian Dollar is undergoing a near-term correction against the US Dollar on Tuesday, with AUD/USD easing around 0.13% toward 0.7210 during European trading. The move appears to be a temporary pullback following the pair’s recent advance rather than the beginning of a broader bearish reversal.
The correction has been encouraged by a modest recovery in the Greenback. The US Dollar Index (DXY) has climbed around 0.1% toward 99.00 after starting the session on weaker footing. Nevertheless, Dollar momentum remains limited as investors await Friday’s US Consumer Price Index report for clearer direction on Federal Reserve policy.
TD Securities expects underlying inflation to remain relatively contained, forecasting core CPI at 0.19% month-on-month and 2.3% year-on-year. Headline inflation, however, is expected to be firmer at 0.37% monthly and 3.4% annually, largely because of higher energy prices and some acceleration in food costs.
The inflation report will be particularly important after Fed officials indicated that September’s policy decision remains dependent on incoming price data. Governor Christopher Waller recently acknowledged signs of disinflation but warned that an unexpectedly strong August CPI report could strengthen the argument for another rate increase.
For the Australian Dollar, attention now shifts toward comments from RBA Deputy Governor Andrew Hauser. A relatively hawkish message could reinforce expectations that Australian monetary policy will remain restrictive and provide renewed support for the Aussie once the current correction runs its course.
Commonwealth Bank of Australia strategists also see the currency remaining around the $0.72 region through much of the week, suggesting that the present weakness does not necessarily signal a significant change in direction.
The broader picture therefore remains constructive for AUD/USD. A controlled correction could allow the pair to consolidate recent gains before attempting another move higher, particularly if Australian policy expectations remain supportive and Friday’s US inflation figures fail to significantly strengthen the Dollar.
Technical Analysis
AUD/USD remains firmly supported by its broader bullish structure on the 4-hour chart, although the latest price action suggests the pair could ease lower before attempting another advance. The rally from the late-July lows has developed through a consistent series of higher lows, with the ascending trendline continuing to underpin the move.
The pair is currently hovering around 0.7212, where upside momentum has started to slow. Repeated hesitation around 0.7210–0.7220 suggests buyers may need a period of consolidation before challenging higher levels. This leaves room for a corrective move toward 0.7180–0.7195, an area that combines the rising trendline with previous resistance and could now provide support.
A successful defence of this region would keep the bullish structure intact and create the conditions for another push through 0.7220. Above there, attention would shift toward the stronger 0.7255–0.7265 resistance zone. Breaking that barrier would reinforce the continuation pattern and could drive AUD/USD toward 0.7280–0.7300, followed by the larger upside objective around 0.7340–0.7350.
The outlook would become less constructive if the correction extends below the rising trendline and price establishes itself beneath 0.7170. That would indicate the pullback is developing into something deeper and could expose the 0.7100 region.
For now, however, the chart continues to favour a buy-the-dip scenario. A controlled retreat toward trendline support would fit within the existing uptrend, with the preferred path remaining correction first, followed by another bullish continuation toward fresh highs.
TRADE RECOMMENDATION
BUY AUD/USD
ENTRY PRICE: 0.7215
STOP LOSS: 0.7120
TAKE PROFIT: 0.7340
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