The Australian Dollar (AUD) stabilized and recovered most of its previous day's modest losses, trading around the mid 0.7100s against the US Dollar (USD) on Tuesday. This rebound followed the release of the Reserve Bank of Australia (RBA) July meeting Minutes, which were interpreted as a 'hawkish hold.' The Minutes revealed that several RBA board members believe another rate hike may still be necessary, citing upside risks to inflation. Concerns highlighted included rising oil prices, broad cost pass-throughs, and the data center boom, although some members also noted offsetting downside risks. The futures market now reflects a slightly higher than 60% probability of a further rate hike before year-end, a slight increase from the previous week. The next significant data point for the market will be Australia's July Consumer Price Index (CPI), scheduled for release on Wednesday [1].
The US Dollar remained soft, partly due to the US Treasury's decision to at least double its buyback operations for longer-dated bonds. Reports indicate that Secretary Scott Bessent could utilize up to $1 trillion from the Treasury General Account to fund these repurchases. Additionally, escalating sanctions on Iran have contributed to market unease, further weighing on the Greenback [1].
From a technical perspective, AUD/USD was trading at 0.7160, maintaining a modest bullish bias as it stayed above both the 20-period Simple Moving Average (SMA) at 0.7149 and the 100-period SMA at 0.7081. The pair was consolidating just below horizontal resistance at 0.7167, with the Relative Strength Index (RSI) near 61, indicating positive but not extreme momentum. Immediate resistance is at 0.7167, and a break above this level could extend the recent recovery. On the downside, support is clustered around 0.7154, 0.7143, and 0.7138, with the 20-period SMA reinforcing this zone. A deeper pullback would bring the 100-period SMA at 0.7081 into focus [1].
CONCLUSION
The Australian Dollar's modest recovery was driven by hawkish signals from the RBA and a weaker US Dollar environment. Market participants are now focused on upcoming Australian CPI data, which could influence expectations for further RBA rate hikes. Technical indicators suggest the AUD/USD pair retains a bullish bias as long as key support levels hold.