FOREX: AUDUSD Medium-Term Trend Bolstered This Week [1/2]

Jul-02 09:49

Despite a softer-than-expected retail sales print in May, AUD weakness on Wednesday is more reflective of broader G10 declines as the dollar trades on a more stable footing. Two key factors have helped stabilise the greenback: the reversal higher for US yields from dovish extremes and an important technical support holding for the DXY, a trendline drawn across the 2011 and 2021 lows.
Despite this, AUDUSD is broadly consolidating at more elevated levels following Monday’s break back above 0.6550 and subsequent extension to fresh recovery highs. Price action bolsters the medium-term bullish trend set-up, and sights remain on key resistance at 0.6688, the US election related highs.
The RBA is more sanguine about the risk of a global slowdown than it was in May when it cut the cash rate by 25 basis points to 3.85%, with any trade-related impacts likely to take time to materialise domestically and as China shows resilience, MNI understands. The board will meet on July 8 – all surveyed analysts so far expect a 25bp cut to 3.60%.

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