AUD/USD Vulnerable amid Struggle to Test January High

Australia Dollar Outlook: AUD/USD

AUD/USD clears the July high (0.6799) as the update to Australia’s Consumer Price Index (CPI) shows a higher-than-expected print, but lack of momentum to test the January high (0.6839) may keep the Relative Strength Index (RSI) out of overbought territory.

AUD/USD Vulnerable amid Struggle to Test January High

AUD/USD may stage additional attempts to breakout of the range bound price action from earlier this week as it registers a fresh monthly high (0.6813), and Australia’s Retail Sales report may also influence the exchange rate as household spending is expected to increase for the fourth consecutive month.

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Australia Economic Calendar

FOREX.com Economic Calendar

Australia Retail Sales are projected to increase 0.3% in July following the 0.5% expansion the month prior, and a positive development may generate a bullish reaction in the Australian Dollar as it raises the Reserve Bank of Australia’s (RBA) scope to further combat inflation.

However, a weaker-than-expected retail sales report may put pressure on Governor Michele Bullock and Co. to alter the path for monetary policy, and signs of a slowing economy may drag on AUD/USD as it fuels speculation for an RBA rate-cut.

With that said, developments coming out of Australia may continue to sway AUD/USD as it registers a fresh monthly high (0.6813), but the exchange rate may consolidate over the remainder of the month as it struggles to test the January high (0.6839).

AUD/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; AUD/USD on TradingView

AUD/USD may continue to trade to fresh monthly highs as it attempts to break out of the range bound price action from earlier this week, with a break/close above the 0.6810 (23.5% Fibonacci extension) to 0.6820 (23.6% Fibonacci retracement) region bringing the January high (0.6839) on the radar.
Next area of interest comes in around 0.6920 (50% Fibonacci retracement) to 0.6930 (23.6% Fibonacci retracement), but AUD/USD may largely mirror the price action from last month if it fails to break/close above the 0.6810 (23.5% Fibonacci extension) to 0.6820 (23.6% Fibonacci retracement) region.
Failure to defend the weekly low (0.6762) may push AUD/USD back towards 0.6740 (38.2% Fibonacci retracement), with a breach below the 0.6590 (38.2% Fibonacci extension) to 0.6600 (23.6% Fibonacci retracement) area opening up the 0.6510 (38.2% Fibonacci retracement) to 0.6520 (23.6% Fibonacci retracement) zone.

Additional Market Outlooks

US Dollar Forecast: GBP/USD Susceptible to RSI Sell Signal

Euro Forecast: EUR/USD Preserves Advance Following Fed Symposium

USD/JPY Rebounds Ahead of Monthly Low to Keep RSI Above 30

USD/CAD Falls Towards April Low as Fed Signals Policy Adjustment

--- Written by David Song, Strategist

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