- AUD/USD remains bearish for the week, extending its losses by almost 1.80%.
- Sentiment remains negative due to high inflation reports from the US, further cementing the Fed’s aggressive tightening.
- AUD/USD Price Analysis: Tipped Down; Unless the buyers retake 0.6800, the downside pressure continues.
The AUD/USD cuts two consecutive days of gains and falls during the American session, with a disappointing market sentiment, after a report indicating that the prices paid by producers remain high, following the path of consumer inflation, which which further cements the case for aggressive Fed tightening.
AUD/USD is trading at 0.6732 after recovering from an initial trip to daily lows at 0.6681 on broad US dollar strength, although it regained some ground once the dust settled, stabilizing at current price levels.
AUD/USD falls on dollar strength, despite good news on jobs in Australia
Earlier in the American session, the US Department of Labor reported that the producer price index crossed the 11% threshold in a year-over-year reading. Although it was a negative report, it shows that producers are getting some breathing space as commodity prices pull back on concerns about global demand. Following Wednesday’s CPI, that report could open the door for a larger-than-expected 75 basis point Fed rate hike, as the Eurodollar July money market futures contract shows 271.50 basis points. adjustment.
All of this weighed on AUD/USD, which fell towards 0.6680 after the release. At the same time, US initial jobless claims for the week ending July 9 rose by 244,000, although they were mostly ignored by investors, who focus on inflation.
Meanwhile, during the Asian session, the AUD/USD was bolstered by a better-than-expected employment report, which showed the jobless rate falling to its lowest level in 50 years. Meanwhile, expectations of a 50bp rate hike from the Reserve Bank of Australia (RBA) are fully priced in. Although AUD/USD rose after the release of the report, the appetite for the safety of the US dollar weighed on the pair.
What must be considered
On the Australian economic calendar, June new home sales will be released on Friday. The US economic calendar is packed with data, led by retail sales, consumer sentiment from the University of Michigan (UoM) and other statements from the Federal Reserve, before entering the tightening period.
AUD/USD Price Analysis: Technical Outlook
The Australian dollar remains tilted lower, although it remains capped by the daily low of 12 Jul at 0.6710, which if broken again on the day, sellers would step in, paving the way for further losses. Furthermore, oscillators continue to favor shorts, which strengthens the case. Therefore, the first support for the AUD/USD would be 0.6700. If it breaks below, the low for the year will be seen at 0.6681, followed by the May 2020 lows at 0.6616.
AUD/USD Key Technical Levels
Source: Fx Street
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