AUD to USD Forecast: Bears Eye Sub-$0.68 and a 4-day Losing Streak

Highlights

• There are no economic indicators from Australia to consider this morning.
• However, after the RBA meeting minutes, investors will be mindful of the employment numbers out tomorrow.
• The near-term technical indicators are bullish but will hinge on the employment numbers on Thursday.

On Tuesday, the AUD/USD slipped by 0.06% to end the day at $0.68114, with the RBA meeting minutes testing buyer appetite.

While the RBA minutes revealed the willingness to push the cash rate higher, Board members also expected inflation to soften and capacity pressures to ease, which could remove the need for further action.

This morning, there are no economic indicators from Australia for investors to consider. However, we expect further reaction to the overnight stats from the US and caution ahead of tomorrow’s employment numbers. The Australian labor market is a focal point for the RBA, with tighter labor market conditions supportive of further tightening.

Tight labor market conditions lead to a pickup in wage growth due to a lack of skilled labor. Wage growth translates into increased spending power that drives demand for goods and services, straining supplies and leading to increased price pressure.

The US Session

US prelim building permits and housing start numbers for June will draw interest this afternoon.

A continued uptrend in permits and starts would signal optimism among home builders and strong home buyer demand. Upbeat numbers would support the theory of a soft landing despite the disappointing US retail sales and industrial production numbers. The housing sector is a litmus test of the US economy.

AUD/USD Price Action

Daily Chart

The Daily Chart showed the AUD/USD testing support at the psychological $0.68 support level while holding above the $0.6755 – $0.6729 support band.

Notably, the AUD/USD also remained above the 50-day ($0.67158) and 200-day ($0.67517) EMAs, signaling bullish momentum over the near and longer-term time horizons.

Despite three consecutive days in the red, the 50-day EMA closed in on the 200-day EMA, supporting the near-term bullish outlook.

Looking at the 14-Daily RSI, the 58.34 reading signals a bullish trend and supports a run at the $0.6878 – $0.6905 resistance band. However, a fall to sub-$0.68 would bring the upper level of the $0.6755 – $0.6729 support band and the 200-day EMA ($0.67517) into play.

4-Hourly Chart

Looking at the 4-Hourly Chart, the AUD/USD finds support at the $0.68 psychological level. After the bearish Tuesday session, the AUD/USD continues to sit below the $0.6878 – $0.6905 resistance band. However, the AUD/USD remains above the 50-day ($0.67750) and 200-day ($0.67184) EMAs, sending bullish signals. Significantly, the 50-day EMA pulled away from the 200-day EMA, supporting a run at $0.6850.

However, the AUD/USD must avoid sub-$0.68 and the $0.6755 – $0.6729 support band to target $0.6850.

Looking at the RSI indicator, the 14-4H RSI reading of 52.46 indicates moderately bullish momentum, with buying pressure outweighing selling pressure. The RSI is aligned with EMAs and supports a run at $0.6850.