The AUD/USD ended Tuesday’s trading on a lower note, following Monday’s 1.02% gain. This gain was triggered by higher iron ore prices, which also coincided with an increase in China’s imports of the commodity, as reported last week. However, the market optimism was short-lived as the US Dollar attained late demand on Tuesday, pushing the pair lower ahead of Wednesday’s key inflation data.
In a sparse week in terms of market-moving economic news from down under, the AUD/USD and other USD pairs will look toward US data for direction. The consumer price index comes up on Wednesday, and the outcome will either support a case for a more aggressive tightening of US monetary policy or will defeat this expectation.
The pair has opened for trading on Wednesday in muted fashion, which is not unexpected for markets waiting for a big fundamental trigger.
Monday’s uptick met rejection at 0.69848 (16 May and 26 July highs). The pullback move has to drop towards the 0.68719 support level, the site of three-week lows, to make that area the test area for the bears. When this support is broken, the bears can make a valid push for downside targets at 0.67664 (1 July and 6 July lows) and the 14 July low at 0.66842.
Otherwise, the bulls would have to get confirmation of the upside move via a break of 0.69848. This would create a pathway to 0.70408 at the first instance, being the location of the 25 May low and 1 August high. A break above this resistance should give the bulls access to 0.70973 (27 April and 9 June lows). Above this level, the bulls would have clear skies to aim for 0.72420, with 0.73454 lining up as an additional target to the north.