The Australian Dollar (AUD) has experienced a short-term pullback against the US Dollar (USD) after reaching a high of 0.7208, closing at 0.7158 with a 0.50% decline last Friday [1]. United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann note that the month-long AUD strength has ended, suggesting potential for a deeper pullback toward 0.7120, though the medium-term technical outlook still favors a break above 0.7200 and a move toward the year-to-date high near 0.7280 [1].
During the European trading session on Tuesday, AUD/USD traded marginally lower at around 0.7164, as the US Dollar strengthened due to surging US Treasury yields, with the 10-year yield hitting a 19-month high at 4.78% and approaching a multi-year high of 4.81% [2]. The US Dollar Index (DXY) was also reported marginally higher near 99.50 [2].
Market participants are closely watching upcoming economic data, including the US ISM Manufacturing PMI for August and JOLTS Job Openings for July, both scheduled for release at 14:00 GMT [2]. In Australia, attention is focused on the Q2 Gross Domestic Product (GDP) data, set to be released on Wednesday [2]. ING’s Asia-Pacific research team expects Australian GDP growth to slow to 1.8% year-on-year in Q2, citing ongoing weakness in the housing sector and softer residential investment [2]. Despite an upside surprise in July inflation, which has increased market speculation about a potential Reserve Bank of Australia (RBA) rate hike, ING analysts continue to expect the RBA to remain on hold [2].
From a technical perspective, AUD/USD remains above the 20-day exponential moving average (EMA) at 0.7118, with the Relative Strength Index (RSI) at 63.09, indicating a constructive near-term bias and room for further gains [2]. Immediate support is seen at the 20-day EMA (0.7118), while resistance is eyed at the four-year high of 0.7278 [2]. UOB analysts similarly highlight that a break above 0.7200 would favor range trading or further upside, while a clear break below 0.7120 remains uncertain [1].
CONCLUSION
The Australian Dollar is consolidating above key technical support as markets await critical economic data and RBA policy signals. While short-term risks of a pullback remain, the medium-term outlook retains a bullish bias, contingent on upcoming GDP and inflation data. Market sentiment is cautiously optimistic, with analysts divided on the likelihood of further RBA rate hikes.