The Australian dollar hovered near 0.7061, with AUD/USD down 0.01%, after softer US Producer Price Index data undercut the greenback before it ended Thursday almost flat. Core PPI also eased in line with forecasts, while Initial Jobless Claims for the week ending 8 August rose to 209K from 200K, above expectations but close to the four-week average. Rate pricing shifted: markets now see the next Federal Reserve increase towards the end of 2026, and for September the probabilities moved to 30% for a hike versus 70% for a hold. In Australia, Reserve Bank of Australia Assistant Governor Christopher Kent said inflation risks are skewed higher and could warrant further tightening, with Governor Michelle Bullock due to speak; US diary items include July Retail Sales and the University of Michigan Consumer Sentiment.
Technically, AUD/USD traded around 0.7062, maintaining a bullish bias above a simple moving average cluster near 0.6990 and rising trend-line support around 0.6955, with the broader uptrend from the 0.6830s intact. The Relative Strength Index (14) sat near 59. Resistance levels were flagged around 0.7277 and 0.7297, ahead of projections towards 0.8385 and 0.9080, while downside levels included 0.6955, 0.6990 and, further out, 0.6403.
Strategic Positioning for Further AUD/USD Strength
We recommend that derivative traders position themselves for continued Aussie Dollar strength in the coming weeks. With the AUD/USD pair holding firmly above the key 0.7000 psychological level, the path of least resistance remains to the upside. We should look to buy call options or establish long futures positions on dips toward the 0.6990 support zone.
This bullish outlook is supported by the widening monetary policy gap between Australia and the United States. While softer U.S. producer price data has traders pricing in a 70% chance of a Federal Reserve hold in September, the Reserve Bank of Australia remains highly hawkish. Australia’s core inflation has averaged around 3.9% recently, keeping pressure on the RBA to maintain its restrictive 4.35% cash rate.
Options Strategies and Key Risk Events
To capitalize on this trend, we suggest using bull call spreads targeting the 0.7200 to 0.7300 range. This options strategy limits our premium risk while positioning us for a test of the 0.7277 resistance level. Historical data shows that when the AUD/USD successfully clears the 0.7000 threshold, it often triggers sharp upward momentum toward these higher technical barriers.
However, we must closely monitor today’s upcoming speech from RBA Governor Michelle Bullock and upcoming U.S. retail sales data for sudden shifts in sentiment. It is wise to place stop-losses on long positions just below the trend-line support at 0.6955. A close below this level would invalidate the bullish setup and require us to exit our long positions.
