The pair will likely continue falling as sellers target the next key support level at 0.6950.

Bearish View

• Sell the AUD/USD pair and set a take-profit at 0.6950.
• Add a stop-loss at 0.7050.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 0.7050 and a take-profit at 0.7150.
• Add a stop-loss at 0.6970.

The AUD/USD price dropped to a low of 0.700 as the market reacted to the latest minutes by the Reserve Bank of Australia (RBA). The price was about 2% below the highest level this month ahead of the latest US retail sales and FOMC minutes.

FOMC Minutes and US Retail Sales

The AUD/USD has been in a strong bearish trend as the market waited for the upcoming US retail sales numbers. These are important data because consumer spending is the biggest part of the American economy.

Economists expect the numbers to reveal that the volume of retail sales dropped in July this year. They believe that sales dropped from 1.0% in June to 0.1% in July. In the same period, analysts expect that core sales dropped from 1.0% to -0.1% in July.

These results comes a day after the some of the biggest retailers in the country published their results. Walmart said that its revenue rose by 8.4% in the second quarter to $152.85 billion. Similarly, Home Depot, the biggest home improvement retailer, said that its net income rose to $5.17 billion. Other firms like Target and Lowe’s are expected to publish strong results.

The AUD/USD price will also react to the latest minutes by the Federal Open Market Committee (FOMC). These minutes will provide more details about the deliberations took place in its July meeting. In it, the bank decided to hike interest rates by 0.75% and continue with its quantitative tightening policy.

Most Fed officials believe that the bank will continue hiking interest rates even after last week’s weak inflation numbers. The data showed that the country’s inflation dropped slightly in June as gasoline prices dropped.

AUD/USD Forecast

The AUD/USD price dropped to 0.700, which was the lowest level since August 10. On the four-hour chart, the pair moved slightly below the important support level at 0.7050, which was the highest point on August 1st. It moved slightly below the 25-day and 50-day moving averages and the standard pivot point.

The pair has also formed a break and retest pattern by retesting the key point at 0.7050. Therefore, the pair will likely continue falling as sellers target the next key support level at 0.6950. A move above the resistance at 0.7055 will invalidate the bearish view.

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The pair will likely continue rising as buyers target the next key resistance point at 0.7200.

Bullish View

• Buy the AUD/USD and set a take-profit at 0.7200.
• Add a stop-loss at 0.7000.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 0.7050 and a take-profit at 0.6970.
• Add a stop-loss at 0.7100.

The AUD/USD price soared to the highest level since June 10th of this year after the latest American consumer inflation data. It rose to a high of 0.7110, which was about 6.1% above the lowest level this year.

US Inflation Eases

The AUD/USD price jumped sharply after the US consumer inflation data. According to the Bureau of Labor Statistics (BLS), the headline CPI dropped from 1.3% to 0.0% in July. This decline translated to a year-on-year increase of 8.5%, which was lower than the previous 9.1%.

Core inflation also declined from 0.7% to 0.3%, which was lower than the median estimate of 0.5%. As a result, it remained at 5.9% on an annualized basis. Additional data showed that real earnings rose by 0.5% from the previous -0.9%.

Inflation dropped because of the falling oil prices. Brent and West Texas Intermediate (WTI) has dropped from the year-to-date high of over $135 to below $100. At the same time, gasoline prices declined from the year-to-date high of $5 to a low of $4.

Analysts expect that inflation will continue falling considering that the price of other commodities has also dropped. Lumber has dropped to the lowest level in months. The same is true with others like iron ore and copper.

Therefore, the AUD/USD pair rose since investors expect that the Federal Reserve will slow down on its rate hike policies. It has already hiked by 225 basis points this year and analysts believe that it will hike by 50 basis points in the September meeting.

There will be no economic data from Australia on Thursday. Therefore, focus will be on the upcoming US producer price index (PPI) data. Economists expect the data to show that PPI dropped from 11.3% to 10.4% in July.

AUD/USD Forecast

The four-hour chart shows that the AUD/USD pair rose to a high of 0.7108 after the strong American inflation data. As it rose, it moved above the important resistance level at 0.7048, which was the highest point on August 1. It has managed to move above the 25-day and 50-day moving averages and the first resistance of the standard pivot point.

Therefore, the pair will likely continue rising as buyers target the next key resistance point at 0.7200. A drop below the support at 0.7050 will invalidate the bullish view.

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The pair will likely continue falling as sellers target this support at 0.6850.

Bearish View

• Sell the AUD/USD pair and set a take-profit at 0.6850.
• Add a stop-loss at 0.6950.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 0.6945 and a take-profit at 0.7050.
• Add a stop-loss at 0.6875.

The AUD/USD price retreated on Monday morning, continuing the spectacular plunge that happened on Friday last week. The pair crashed to a low of 0.6875, which was the lowest level since July 21st. It has crashed by more than 2.50% below the highest point this month.

China and Taiwan Worries

The Australian dollar declined slightly after the latest China trade numbers. According to the country’s statistics agency, China’s exports rose from 17.9% in June to 18.0% in July. This increase was significantly better than the median estimate of 15.0%. It was also a surprise because of the challenging macro environment the world is in.

At the same time, China’s imports rose from 1.0% to 2.3%. As a result, the trade surplus jumped from over $97 billion to over $101.26 billion. Analysts were expecting the country’s trade surplus to narrow to about $90 billion. These numbers are important to the Australian dollar because of the strong ties between Australia and China.

The AUD/USD dropped as worries to the ties between the US and Australia and China worsened because of the ongoing tensions on Taiwan. During the weekend, China’s government officials warned Australia against interfering on the issue. China’s military continued its drills near Taiwan in response to last week’s Pelosi’s visit.

Meanwhile, the pair also declined sharply as investors reacted to the blemish-free jobs report from the United States. Data by the Bureau of Labor Statistics (BLS) revealed that the country’s economy added 528k jobs in July after it added almost 400k jobs in the previous month. At the same time, the unemployment rate dropped from 3.6% to 3.5%.

The next major data to watch will be the upcoming US consumer inflation data. Economists expect the data to show that inflation dropped from 1.3% in June to 0.2% in July, translating to a year-on-year gain of 8.7%.

AUD/USD Forecast

The AUD/USD pair made a bearish breakout below the lower side of the ascending channel last week. The sell-off then continued after the US published strong jobs numbers on Friday. On the four-hour chart, it has moved below the 25-day and 50-day moving averages and is slightly above the important support at 0.6850, which was the lowest level on June 14th,

The pair will likely continue falling as sellers target this support at 0.6850. A drop below that support point at 0.6850 will open the possibility of it moving below 0.6800.

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