• AUD/USD added to Monday’s positive factors and surpassed the 0.6600 barrier.
• Further weak point within the US Dollar contributed to the upside in AUD.
• The Australian Wage Price Index rose by 0.8% QoQ in Q2.

AUD/USD resumed its upward trajectory, including to positive factors recorded in the beginning of the week and surpassing the 0.6600 mark to print recent three-week highs close to 0.6620, a area coincident with the 100-week SMA.

Having surpassed the vital 200-day SMA (0.6596), the outlook for AUD/USD ought to regularly shift to a extra constructive one, permitting for the continuation of the uptrend a minimum of within the short-term horizon.

Tuesday’s advance within the pair coincided with a broad restoration within the risk-linked galaxy and combined efficiency within the commodity sector, the place each copper costs and iron ore costs eased a tad from Monday’s ranges.

Back to financial coverage, traders’ confidence within the Australian forex was additional supported by the Reserve Bank of Australia’s (RBA) newest determination to take care of its official money price (OCR) at 4.35%. The RBA emphasised its cautious strategy, indicating that it’s not in a rush to ease coverage with expectations that home inflation will stay persistent. Both trimmed-mean and headline CPI inflation are now anticipated to strategy the mid-point of the 2-3% vary by late 2026, reasonably than the beforehand anticipated June 2026.

During her press convention, RBA Governor Michele Bullock talked about that the Board thought-about a price hike and confused that price cuts will not be imminent. She additionally famous that expectations for price cuts are untimely.

In her newest feedback, Governor Bullock reiterated that the financial institution wouldn’t hesitate to lift rates of interest if crucial to regulate inflation, underscoring a hawkish stance as underlying inflation stays elevated. She highlighted the financial institution’s vigilance concerning the dangers of rising inflation, following the choice to maintain rates of interest unchanged. Core inflation, which stood at 3.9% final quarter, is anticipated to lower to the goal vary of two% to three% by late 2025.

Overall, the RBA is likely to be the final among the many G10 central banks to start slicing rates of interest. Potential easing by the Federal Reserve (Fed) within the medium time period, contrasted with the RBA’s anticipated extended restrictive stance, might assist the AUD/USD within the coming months.

However, the sluggish momentum within the Chinese economic system might impede a sustained restoration of the Australian greenback. China continues to face post-pandemic challenges, deflation, and inadequate stimulus for a strong restoration. Concerns about demand from China, the world’s second-largest economic system, additionally arose following the Politburo assembly, the place, regardless of guarantees to assist the economic system, no particular new stimulus measures have been launched.

Notably, Chinese inflation figures confirmed a slight improve in July, each within the month-to-month and yearly CPI, whereas Producer Prices additionally got here in barely above estimates.

Meanwhile, non-commercial merchants (speculators) largely stay net-short on the AUD, primarily in response to the dearth of optimistic indicators from China. Barring a two-week interruption in positioning, web shorts have prevailed since Q2 2021.

AUD/USD every day chart

AUD/USD short-term technical outlook

Further will increase ought to push the AUD/USD to focus on the transitory 55-day SMA of 0.6637, forward of the July prime of 0.6798 (July 8) and the December peak of 0.6871.

Occasional bearish strikes may immediate a transfer to the 2024 backside of 0.6347 (August 5) earlier than falling to the 2023 low of 0.6270 (October 26).

The four-hour chart suggests a modest pick-up in the interim. That stated, the speedy barrier comes on the 200-SMA at 0.6637 forward of 0.6702. On the opposite hand, preliminary assist is on the 100-SMA of 0.6556, previous to the 55-SMA of 0.6542, after which 0.6347. The RSI superior to round 66.