- AUD/USD hit a 2-week high around 0.690 but pulled back as the environment remains mixed.
- Over the week, US housing data shows the impact of rising US interest rates.
- AUD/USD Price Analysis: Rising Wedge Breakout Opens Door Towards 0.7000; otherwise, a drop to 0.6800 is anticipated.
The AUD/USD It broke three days of gains during the North American session, pulling back from three-week highs around 0.6930, after opening around the 0.6880 area before hitting the latter.
However, over the past hour, AUD/USD dipped below 0.6900 after US housing data showed a slowdown in the housing market, meaning recession fears linger on the mind. of the operators. At time of writing, AUD/USD is trading at 0.6889, almost sideways, amid a mixed market environment, which increased appetite for safe-haven partners.
US housing data shows signs of economic slowdown
Over the week, US housing data has started to show rising interest rates. On Tuesday, data on housing and building permits showed a housing market contraction, 2% and 0.6% respectively. Further fueling recession fears are Existing Home Sales, which also fell 5.4% to a two-year low, plummeting, versus expectations for 5.4% growth.
Meanwhile, during the Asian session, Reserve Bank of Australia (RBA) Governor Philip Lowe made remarks. Lowe said further interest rate hikes are needed, while stating that the bank needs to “chart a credible path back to 2-3%” inflation, in which unemployment remains low while the economy it grows. Lowe’s has raised rates by 125 basis points since May, and some analysts expect the RBA to move to the new 75 basis point threshold at the August meeting.
That said, a US stagflation scenario would bolster USD appetite. But in addition, an aggressive RBA could prevent AUD/USD traders from opening aggressive short positions in the short term.
AUD/USD Price Analysis: Technical Outlook
AUD/USD buyers got what they were hoping for: a breakout to the upside of a falling wedge, propelling the pair above 0.6900 for a 150 pip gain from the breakout level around 0.6785 to the weekly high at 0.6930. . Nonetheless, the pair still has a bearish bias from a medium to long-term perspective, even though the 20-day EMA gave way to buyers.
To the upside, AUD/USD will face resistance at the 0.6900 figure, followed by the 50-day EMA at 0.6970 and the triple zero at 0.700. To the downside, the next support level for the AUD/USD would be the 20-day EMA at 0.6838, followed by 0.6800.
Source: Fx Street
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