Current trend

The AUD/USD pair is correcting at 0.6721 amid an unstable American dollar exchange rate and Australian macroeconomic statistics.

The Q2 gross domestic product (GDP), as expected, increased by 0.2% QoQ and decreased from 1.3% to 1.0% YoY. Experts attribute it to high interest rates of the Reserve Bank of Australia (RBA) and persistent inflation, which puts pressure on consumer demand. Household spending decreased by 0.2%, and in these conditions, government spending remains the main stimulus for economic development. Nevertheless, the August business activity data supported the national currency. The service PMI adjusted from 50.4 points to 52.5 points, exceeding the forecast of 52.2 points, and the composite PMI – from 49.9 points to 51.7 points. Today, RBA Governor Michelle Bullock gave a speech on the country’s economic problems. She noted that the regulator’s decision to keep the cost of borrowing at 4.35% was based on a new scenario for inflation movements over the next few years, which envisages the indicator returning to the target range no earlier than the end of 2025 and maintaining it steadily in it by mid–2026. However, now we are talking about a channel with a midpoint at 2.5% and not 2.0%, as was previously stated. Such a restrained forecast disappointed investors since the risks of maintaining peak interest rates will increase significantly.

The American dollar is falling, trading at 101.20 in the USDX after the release of the JOLTS report on the number of open vacancies in the labor market. The July figure fell from a revised 7.910M to 7.673M, the lowest since April 2021, when the country was beginning to emerge from the crisis associated with the COVID–19 epidemic. It is not the first indicator to fall to post-pandemic levels, which reflects the major problems in the US economy caused by high interest rates.

In these conditions, a continuation of the local decline in the AUD/USD pair is the most likely scenario.

Support and resistance

On the daily chart, the quotes are completing the movement in the range between the first-order levels (I), and then, it may reach the crossover between the first-order levels (I) of 0.6704. The most likely scenario is a decline to the main crossover of the year between the right support of the first order (I) and the left support of the first order (I) at 0.6704. The long-term target will be the crossover of the left support of the third order (III) and the right support of the third order (III) 0.6607.

In case of an upward reversal, further dynamics will develop in a poor upward trend towards the crossover of the left resistance of the third order (III) and the right resistance of the third order (III) 0.6804. Then, the crossover of the left resistance of the second order (II) and the right resistance of the second order (II) 0.6904 will become a new target.

Resistance levels: 0.6804, 0.6904.

Support levels: 0.6704, 0.6607.

Trading tips

Short positions may be opened after the consolidation below 0.6704, with the target at 0.6607. Stop loss – 0.6750. Implementation period: 7 days or more.

Long positions may be opened after the price consolidates above 0.6804, with the target at 0.6904. Stop loss – 0.6750.