On Monday, July 8th, the Australian dollar (AUD) closed at $0.6737 against the US dollar (USD), down 0.18% for the day. This slight adjustment comes after the AUD/USD pair reached a six-month high of 0.6761 in Asian trading on Friday.

Key Factors Affecting the AUD/USD Pair

  • Profit-Taking: The minor pullback on Monday can be attributed to profit-taking following Friday’s high.
  • Commodity Pressure: A dip in commodity prices on Monday weighed on the Australian dollar.
  • Diverging Central Bank Expectations: Despite the slight decline, the AUD’s downside appears limited due to differing rate expectations between the Reserve Bank of Australia (RBA) and the Federal Reserve.

    • Market expectations for an RBA rate hike in August: 27% probability
    • Probability of a Fed rate cut in September: 80%
       

    • Upcoming Events to Watch

  • Fed Chair Powell’s Congressional Testimony: Tuesday/Wednesday
  • US CPI Data: Thursday

    • These events could potentially stimulate further AUD gains if they indicate a likely Fed rate cut in September.
     Technical AnalysisFrom a daily chart perspective:

  • Bullish outlook if AUD/USD closes above 0.6750 (76.4% Fibonacci retracement of the April-December downtrend from 0.6870 to 0.6361)
  • Next target: 0.6870

    • Key levels to watch:

  • Resistance: 0.6770, 0.6800, 0.6840
  • Support: 0.6700-10, 0.6675-80

    • In conclusion, while the AUD/USD pair experienced a slight dip on Monday, the overall outlook remains bullish. Traders should keep a close eye on upcoming US economic data and Fed commentary for potential catalysts that could drive the pair higher.More By This Author:USD/JPY Holds Steady As Markets Digest Japanese Wage Data And BOJ Speculation
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