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The Australian Dollar (AUD) is steady against the US Dollar (USD) on Tuesday, with AUD/USD bulls eyeing a potential breakout above 0.6600.

In the United States, concerns over fiscal and monetary policy have continued to pressure demand for the Greenback.

With AUD/USD threatening to break above the upper boundary of a rising wedge pattern, the 61.8% Fibonacci retracement level of the September-April decline continues to provide support near 0.6550.

While the formation of a Doji candle on the daily chart signals a potential pause in upside momentum, Australian Retail Sales data on Wednesday may serve as an additional catalyst for the short-term move.

AUD/USD remains conflicted ahead of Australian Retail Sales and US ADP data

Expectations are for Aussie Retail Sales to have increased by 0.3% in May after contracting by 0.1% in April. This dataset is important as it reflects consumer spending trends and provides insight into the resilience of the Australian economy. This is also monitored closely by the Reserve Bank of Australia (RBA) and influences interest rate expectations.

For the United States, Wednesday’s economic calendar brings the ADP Employment Change report for June into focus, shedding light on the employment trends of the US private sector.

As the Fed remains committed to monitoring the incoming employment and inflation data before reducing interest rates, this jobs report may influence the potential trajectory for interest rates.

On Tuesday, Federal Reserve (Fed) Chair Jerome Powell spoke at the European Central Bank (ECB) forum in Sintra, Portugal.

When questioned on the trajectory of monetary policy, Powell stated, "It's going to depend on the data, and we are going meeting by meeting. I wouldn't take any meeting off the table or put it directly on the table. It's going to depend on how the data evolves.”

These comments suggest that the Fed is not rushing to cut rates, increasing the potential for a September cut rather than one in July. 

With Tuesday’s US ISM Manufacturing and JOLTS data beating expectations, resilient US data remains supportive of a more data-dependent Fed.

AUD/USD searches for a fresh catalyst as bulls head toward 0.6600

From a technical standpoint, AUD/USD is threatening a break of the rising wedge pattern with bulls eager to drive prices to psychological resistance at 0.6600.

A decisive daily close above 0.6600 could spark a push toward November’s swing high at 0.6688 and the 78.6% Fibonacci retracement of the September-April decline at 0.6722.

On the downside, initial support is marked by the 61.8% Fibo level at 0.65495, followed by the confluence of the 50-day and 200-day Exponential Moving Averages (EMAs) at 0.6458 and 0.6430, respectively. 

AUD/USD daily chart

(Click on image to enlarge)

A breakdown below wedge support near 0.6470 would signal a loss of bullish momentum and potentially trigger a drop toward the 50.0% retracement at 0.6428.

The Relative Strength Index (RSI) is nearing the 61 mark, reflecting a bullish bias which is not yet indicative of overbought conditions.

This suggests that the pair may have room to move higher, if warranted by declining sentiment in the US or supportive fundamentals in Australia.

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