AUD/USD Technical and Macro Fundamentals
AUD/USD is consolidating, with the medium-term tone supported while it holds above the 200-day SMA at 0.6934, but repeated hesitation around 0.7000 keeps the near-term picture finely balanced. On the daily chart, spot trades at 0.7057, sitting above the 55-day SMA at 0.7005 and near the 100-day SMA at 0.7056, while RSI (14) is near 58 and ADX (14) is around 10. A sustained break above 0.7100 would strengthen the upside case, with reference levels at 0.7088, 0.7200 and a 2026 ceiling near 0.7280; resistance is also flagged at 0.7079, a 0.7278–0.7283 supply area and 0.7661. Failure back towards support would refocus attention on 0.7056, then 0.7005 and 0.6934, with lower levels at 0.6900, 0.6833, 0.6660, 0.6593, 0.6414 and 0.6373.
Domestic data show an economy still expanding: Manufacturing PMI rose to 52.0 from 51.5 and Services PMI to 53.6 from 50.5, while unemployment held at 4.4% in June and employment increased by 76.3K after a revised 44K rise in May. The trade balance swung to a A$1.929 billion surplus in June from a A$2.367 billion deficit, as quarterly growth slowed to 0.3% QoQ from 0.9% and annual growth held at 2.5%. Inflation eased to 3.9% in Q2 from 4.1%, though trimmed mean and weighted median edged up to 3.6% from 3.5%, and expectations fell to 4.7% in July from 5.5%; the RBA left the OCR at 4.35% in June, with markets pricing about 13 basis points of tightening by year-end. China’s Q2 growth was 4.3% YoY, with industrial production up 5.3% and retail sales up 1.0%, as the trade surplus widened to $125.62 billion from $105.4 billion and the PBoC kept the 1-year LPR at 3.00% and the 5-year at 3.50%. Positioning data showed CFTC net shorts narrowing to 33.2K contracts from 40.0K, alongside open interest just over 240K versus around 230K; speculative exposure improved to -13.8% from -17.4%, the 4-week change moved to -8.5K from -22.3K, while the net position percentile rose to 74.3 and the speculative exposure percentile to 80.8.
Trading Strategy and Outlook
We should adopt a patient, wait-and-see approach with the Australian Dollar in the coming weeks as it hovers near key resistance levels. With the AUD/USD currently trading around 0.7057, we recommend holding off on aggressive directional bets until a clear trend emerges. This caution is highly justified as the pair remains tightly wedged between the supportive 200-day moving average and the 0.7100 resistance mark.
If we see a sustained break above 0.7100, we should prepare to pivot to a long position to capture a potential short squeeze. Recent CFTC data shows speculative net short contracts have already shrunk by 6,800 to 33.2K, meaning a sudden breakout could force remaining sellers to rapidly cover their positions. This upward momentum would likely target the 0.7200 level, especially if domestic inflation pressures remain sticky.
Alternatively, if the Aussie is rejected at the 0.7000 level, we should look for buying opportunities on a retreat toward the 200-day SMA near 0.6934. A daily close below this critical moving average would break the broader constructive structure and signal a deeper correction. Until then, we must treat the pair as a sidelined, range-bound trade rather than chasing it blindly.
Our neutral-to-bullish outlook is backed by Australia’s resilient economy, which boasts a strong services PMI of 53.6 and a steady 4.4% unemployment rate. Today’s speech by RBA Governor Michele Bullock will be vital, as the central bank’s decision to keep interest rates at a restrictive 4.35% continues to provide a solid floor for the currency. We should monitor global risk sentiment and US Treasury yields in the coming weeks, as these external forces will likely dictate the timing of the eventual breakout.
