- AUD/USD may face resistance in the wedge as Bulls aim to sell in Australia.
- The US dollar is experiencing pressure ahead of Wednesday’s ADP employment report.
- The Australian dollar could continue to gain from the weakening US dollar, with resistance at 0.6600.
The Australian Dollar (AUD) has shown stability against the US Dollar (USD) on Tuesday, with the AUD/USD Bulls eyeing potential breakouts beyond 0.6600.
In the US, ongoing concerns regarding fiscal and monetary policy are creating additional pressure on the greenback.
As AUD/USD nears the upper boundary of the rising wedge pattern, the 61.8% Fibonacci retracement level, which dipped in September and April, is providing support around 0.6550.
The daily charts showing doji candles indicate a potential pause in momentum, but Australia’s retail sales data, scheduled for release Wednesday, could be a significant catalyst for short-term fluctuations.
AUD/USD is navigating challenges before Australian retail sales and US ADP data are released.
After a 0.1% increase in April, retail sales in Australia are anticipated to rise by 0.3% in May. This data set is crucial as it reflects consumer spending trends and offers insights into the Australian economy’s resilience, which the Reserve Bank of Australia (RBA) closely monitors, impacting interest rate expectations.
In the US, the economic calendar for Wednesday focuses on the June ADP Employment Change Report, which will shed light on employment trends within the private sector.
This employment report could influence the future trajectory of interest rates as the Fed remains committed to reviewing incoming employment and inflation data before making any rate cuts.
Federal Reserve Chairman Jerome Powell provided comments on Tuesday during the European Central Bank (ECB) Forum in Sintra, Portugal.
When asked about the trajectory of monetary policy, Powell remarked, “It will depend on data and we will encounter meetings. I cannot dictate from the table; it’s all dependent on how the data evolves.”
This suggests the Fed is not rushing to cut rates, increasing the likelihood of a potential cut in September rather than just July.
Robust US data continues to support the more data-sensitive Fed, although US ISM manufacturing and Jolts data fell short of expectations on Tuesday.
AUD/USD seeks fresh catalysts as Bulls strive for 0.6600
From a technical viewpoint, AUD/USD is on the verge of breaking the rising wedge pattern, with Bulls motivated to push prices towards the key psychological barrier at 0.6600.
A firm daily close above 0.6600 could drive a surge towards the Fibonacci level at 0.6688, correlating with a swing high from November, and the 78.6% retracement level at 0.6722.
On the downside, initial support sits at the 61.8% Fibonacci level around 0.65495, followed by the 50-day and 200-day exponential moving averages (EMA) at 0.6458 and 0.6430, respectively.
AUD/USD Daily Chart
Falling below the wedge support near 0.6470 could indicate a loss of bullish momentum, potentially leading to a decline towards a 50.0% retracement at 0.6428.
The relative strength index (RSI) is approaching the 61 mark, indicating a bullish bias that hasn’t yet fully materialized.
This may suggest that there’s still potential for upward movement in the pairs, especially if US emotions decline or the Australian economy remains supportive.
