The Australian dollar is back in focus as AUD/USD traders await key CPI data and AUD/NZD consolidates after the RBNZ’s dovish cut. With the RBA preferring to act on quarterly inflation reports, and the US dollar caught between Fed politics and weak yields, the stage is set for volatile Aussie price action. Meanwhile, AUD/NZD momentum has paused near historical highs, with traders weighing whether bulls can extend the rally.
View related analysis:
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AUD/USD and AUD/NZD Price Action Levels
US Dollar Reacts to Fed Governance Tensions
Fed Governor Cook is preparing to sue President Trump for attempting to fire her, a move that could thwart his efforts to replace sitting Federal Reserve members with Republican doves. This marks a pivotal moment, as it may set a precedent for future attempts to remove board members for political gain.
The US dollar tracked Treasury yields lower during quiet Asian trade on Tuesday following initial reports that Trump had sent a dismissal letter to Cook. Still, downside was limited given the potential significance of these developments. Meanwhile, Wall Street indices, ever the optimists, closed higher regardless.
AUD/USD Traders Focus on CPI after RBA’s Latest Cut
Australia’s monthly inflation figures will be closely watched by AUD/USD traders today at 11:30 AEST. Trimmed mean and weighted mean CPI eased to 2.5% and 1.9% y/y respectively in last month’s report and could soften further today. However, given that the Reserve Bank of Australia (RBA) chose to wait for the more robust quarterly release before delivering a cut it could have made in July, a materially weaker CPI print would be required to spur bets of a September move.
That may limit the immediate market impact of today’s inflation data unless we see a sharp downside surprise. While the RBA has pencilled in one more cut for the year, policymakers appear in no rush to act. With employment conditions still firm, my bias remains for AUD/USD bulls to seek dips, assuming continued US dollar weakness in the coming weeks.
Chart prepared by Matt Simpson – Data source: Australian Bureau of Statistics (ABS), London Stock Exchange Group (LSEG).
AUD/USD Technical Analysis: Australian Dollar vs US Dollar
The Australian dollar gained just 0.2% against the US dollar on Monday, a modest move considering Trump’s latest attack on the Federal Reserve. Even so, Friday’s strong bullish range expansion candle suggests sentiment remains tilted in favour of AUD/USD bulls, with dips potentially offering improved reward-to-risk opportunities.
Key support levels to watch include the weekly pivot point at 0.6475 and the 200-day EMA at 0.6456 — areas that bulls may look to defend, while bears could target on lower timeframes.
Chart analysis by Matt Simpson - data source: TradingView AUD/USD
AUD/NZD Technical Analysis: Australian Dollar vs New Zealand Dollar
The Australian dollar has enjoyed and undeniably strong rally against the New Zealand dollar with the RBNZ being the outright winner of the dovish central bank competition. While bullish momentum on the AUD/NZD weekly chart is showing signs of slowing, its weekly RSI (14) is not yet overbought and is confirming the rally. So perhaps AUD/NZD will make its way closer to the historical highs around 1.1140 – 1.1180.
However, the daily RSI (14) and RSI (2) have reached overbought levels, and a bearish pinbar formed on Tuesday to show a hesitancy to break above 1.11 for now. Should mean reversion kick in, bulls could seek evidence of support around the 1.1032 high / 10-day EMA, or 1.10 handle near the 1.996 high and 20-day EMA.
Chart analysis by Matt Simpson - data source: TradingView AUD/NZD
Key Economic Events for Traders (AEST / GMT+10)
11:00 AUD MI Leading Index (Jul) (AUD/USD, AUD/JPY, ASX 200)
11:30 AUD Construction Work Done (Q2), Weighted Mean CPI (Jul) (AUD/USD, AUD/JPY, ASX 200)
11:30 CNY Industrial Profit YTD (Jul) (USD/CNY, AUD/CNY, CN50)
18:00 CHF ZEW Expectations (Aug) (USD/CHF, EUR/CHF, CHF/JPY)
20:00 GBP CBI Distributive Trades Survey (Aug) (GBP/USD, EUR/GBP, GBP/JPY)
21:00 USD MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Purchase Index, Mortgage Market Index, Mortgage Refinance Index (S&P 500, Nasdaq 100, USD/JPY)
22:30 CAD Wholesale Sales (Jul) (USD/CAD, EUR/CAD, CAD/JPY)
00:30 USD Crude Oil Inventories, EIA Refinery Crude Runs, Crude Oil Imports, Cushing Crude Oil Inventories, Distillate Fuel Production, EIA Weekly Distillates Stocks, Gasoline Production, Heating Oil Stockpiles, EIA Weekly Refinery Utilization Rates, Gasoline Inventories (WTI Crude, Brent Crude, USD/JPY)
01:45 USD FOMC Member Barkin Speaks (S&P 500, Nasdaq 100, USD/JPY)
03:00 USD 5-Year Note Auction (S&P 500, Nasdaq 100, USD/JPY)
View the full economic calendar
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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