In the early New York session, the AUD/USD pair is displaying erratic fluctuations around the 0.6660 level. The Australian dollar has entered a sideways trend as market participants eagerly anticipate the release of the United States ISM Manufacturing PMI data.
The S&P500 is poised to open with a neutral stance, reflecting uncertain signals from US 500 futures. Investor sentiment has turned subdued as they closely monitor the approaching quarterly earnings season. The US Dollar Index (DXY) has slightly extended its decline, slipping below 103.00.
The Australian Dollar is anticipated to showcase significant movement leading up to the Reserve Bank of Australia’s (RBA) interest rate decision. Analysts at Bank of America (BofA) anticipate that the RBA will maintain rates at 4.1% in July, citing softer monthly inflation.
This decision allows the RBA to await the Q2 CPI data, scheduled for release on July 28th, as well as another labor force report on July 20th. However, there is a possibility of a 25 basis points hike in August, which would raise the cash rate to 4.35%.
AUD/USD has experienced a breakout from Wyckoff’s Accumulation phase, signifying a transfer of inventory from retail participants to institutional investors. Although the Australian dollar is currently consolidating, it is expected to achieve further breakout potential.
The 50-period Exponential Moving Average (EMA) at 0.6646 is providing support for bullish sentiments regarding the Australian dollar.
Meanwhile, the Relative Strength Index (RSI) (14) has descended into the range of 40.00-60.00, indicating a waning of upward momentum while still maintaining an upward bias.
A decisive breach above the intraday high of 0.6680 would expose the asset to the June 27 high at 0.6720, followed by the June 23 high at 0.6767.
Conversely, a confident breakdown below the June 29 low at 0.6595 would drag the asset towards the June 02 low at 0.6565, with the round-level support at 0.6500.
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