The Aussie Dollar retraces despite an overall risk-on mood as the US Dollar recovers some ground, sponsored by positive data and easing geopolitical tensions in the Middle East. The AUD/USD trades at 0.7000 after reaching a daily high of 0.7050.
AUD/USD retreats from session highs as stronger US factory data offsets risk-on mood
Progress in US-Iran talks tumbled Oil prices, with the US Oil benchmark, West Texas Intermediate (WTI), losing over 7.70% to $80 per barrel. This eased expectations for higher interest rates from the Federal Reserve, but market participants were also digesting two days of intervention in the FX markets to propel the undervalued Japanese Yen.
The US ISM Manufacturing PMI for July came at 55.6, up from 53.3, its highest level since 2022, while the sub-components of employment showed that companies are hiring, but the prices paid revealed elevated input costs. Even though the sub-components' readings are mixed, overall, they reveal the strength of the US manufacturing industry.
Ahead, the US economic calendar will be busy, with employment data taking center stage. The ADP Employment Change, JOLTS job openings survey, jobless claims, and Nonfarm Payrolls will provide updates on the status of the labor market. If the jobs market remains solid, next week’s inflation data could move the needle sharply, as the Federal Reserve remains laser-focused on tackling five years of high inflation.
New York Fed President John Williams commented that monetary policy is well-positioned to return inflation to the 2% goal. He added that if the economy appears unlikely to push inflation to its target, they wouldn’t hesitate to increase rates. However, he remains optimistic that inflation could aim towards the central bank’s target.
In Australia, the Aussie Dollar opened the session on a higher note due to the intervention by US and Japanese authorities in the FX markets. Nevertheless, as the Yen crosses weakened, the Aussie weakened.
The economic docket in Australia will feature the release of ANZ job advertisements for June and the ANZ-Roy Morgan Australian Consumer Confidence.
AUD/USD Price Forecast: Technical outlook
AUD/USD daily chart
In the daily chart, AUD/USD trades at 0.6999, with the near-term bias capped as the latest reading of the triple simple moving average (50, 100 and 200-day composite) at 0.7007 sits just above spot as immediate resistance. Price is effectively testing an upward-sloping trend-line cluster originating from 0.6833 and 0.6865, keeping the broader uptrend structure intact, while the Relative Strength Index (14) around 52 suggests neutral-to-slightly constructive momentum rather than strong directional conviction.
On the topside, the first hurdle is the grouped longer-term simple moving averages acting as resistance at 0.7007, and a daily close above this barrier would open the way for further recovery toward higher levels on the chart. On the downside, failure to hold the current trend-line pivot zone around 0.6999 would expose a deeper pullback into the broader ascending support structure, with the pair likely to retreat toward prior swing lows within that rising channel.
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