The AUD/USD currency pair is consolidating above the 0.7000 level, trading around 0.7025 during the Asian session on Wednesday, following the release of mixed inflation figures from China. The pair remains close to a nearly two-month low set on Tuesday, with little movement observed for the day [1]. Renewed hostilities between the US and Iran have dampened hopes for a resolution to the ongoing war, negatively impacting investor sentiment. This, combined with diminishing expectations for a rate hike by the Reserve Bank of Australia (RBA) in June, has acted as a headwind for the risk-sensitive Australian Dollar [1].
Despite these pressures, the US Dollar remains subdued as market participants await the latest US consumer inflation data before making new bets, providing some support to the AUD/USD pair [1]. Concerns over the inflationary impact of rising global energy prices, driven by prolonged Middle East tensions, have resurfaced after Chinese data showed producer prices at their highest since July 2022. This has reinforced market expectations that major central banks, including the US Federal Reserve, will maintain a hawkish policy stance, which could favor USD bulls and suggests a downside bias for AUD/USD [1].
From a technical standpoint, the AUD/USD pair has repeatedly failed to break above the 100-day Simple Moving Average (SMA), reinforcing a near-term bearish outlook. The negative Moving Average Convergence Divergence (MACD) and a Relative Strength Index near 35 indicate continued downside pressure. However, the pair remains just above the 61.8% Fibonacci retracement level of the March-May upswing at 0.7003, suggesting caution for bearish traders [1].
A decisive break below this pivotal support could open the way for further declines toward the 78.6% retracement at 0.6929 and potentially to the 200-day SMA near the 0.6837–0.6834 region. On the upside, resistance is seen at the 50% retracement at 0.7055 and the 100-day SMA at 0.7079, with further gains possible toward 0.7107 and 0.7172 if these levels are breached [1].
CONCLUSION
The AUD/USD pair remains under bearish pressure, consolidating just above a key support level amid mixed inflation data from China and ongoing geopolitical tensions. Market participants are cautious, awaiting further signals from US inflation data and central bank policy stances. A break below current support could trigger further declines, while resistance levels remain clearly defined for any potential rebounds.