The Australian Dollar (AUD) climbed to fresh 10-week highs against the US Dollar (USD) on Monday, with the AUD/USD pair trading near the 0.7100 zone and up 0.40% for the day at the time of reporting [1]. This upward movement was attributed primarily to broad-based weakness in the US Dollar, rather than positive developments from Australia itself [1].
Recent US economic data on employment, inflation, and retail sales released in August have consistently underperformed expectations, leading to reduced market anticipation that the Federal Reserve will raise interest rates at its September meeting [1]. The Fed previously held its benchmark rate at 3.50%-3.75% in early August, with three officials dissenting in favor of a hike due to inflation concerns [1].
Meanwhile, several Chinese economic indicators, including Industrial Production and Retail Sales, were released between Sunday night and early Monday. Both metrics slowed from the previous month and missed forecasts, with factory output growing 4.5% in July and retail sales rising just 0.6% [1]. Typically, such data would weigh on the AUD given its sensitivity to Chinese demand, but the current market is dominated by USD weakness, allowing the AUD/USD pair to overlook these negative signals from China [1].
Technical analysis shows AUD/USD trading at 0.7115, maintaining a bullish near-term bias above the 20-period SMA at 0.7077 and the 100-period SMA at 0.7030. The Relative Strength Index (RSI) is near 69, indicating strong but slightly overbought momentum. Immediate resistance is noted at 0.7124, with further barriers at 0.7127 and 0.7129, while support levels are seen at 0.7108, 0.7077, and 0.7030 [1].
CONCLUSION
The Australian Dollar's advance to two-month highs is driven by broad US Dollar weakness following soft US economic data, despite lackluster Chinese figures that would typically weigh on the AUD. Technical indicators suggest continued bullish momentum, though the rally may face resistance near current levels.