AUD/USD Price Analysis – July 26, 2023

Daily Price Outlook

On Wednesday, AUD/USD pair is declining by -0.24% at 0.6773. It has lost about half of its previous daily gains. The declining prices of the AUD/USD pair are driven by weaker Australian inflation figures, a stronger USD supported by positive US economic data, and uncertainty surrounding the Fed's policy outlook. Traders should closely monitor these factors for potential shifts in the AUD/USD pair's direction.

Australian consumer inflation figures, with the headline CPI falling short of expectations at 0.8% in the Q2 and the annual rate decelerating to 6.2%, suggest a weaker economy. This, in turn, raises the possibility of the Reserve Bank of Australia (RBA) pausing future rate hikes, leading to a weakened Australian Dollar.

Simultaneously, the US Dollar is also under pressure today after reaching two-week high yesterday supported by positive US macro data that reflects a resilient economy. Upbeat US consumer confidence data fueled optimism that the US may avoid a recession this year. However, the weak performance of USD ahead of FOMC is keeping check on AUD/USD losses for today.

Following the potential upcoming 25 bps lift-off during the two-day FOMC monetary policy meeting, investors have discounted the likelihood of any further interest rate hikes. Yet, there is skepticism regarding the Fed's commitment to a more dovish approach. 

Hence, market attention will be fixed on the accompanying monetary policy statement and Fed Chair Jerome Powell's post-meeting press conference remarks. These will be closely analyzed for hints about the future rate-hike trajectory, influencing the greenback prices and providing new direction to the AUD/USD pair. 

However, there are factors limiting further losses for the AUD/USD pair. Hopes for more stimulus measures from China are bolstering global equity markets, which, in turn, restricts gains for the safe-haven USD and provides some support to the risk-sensitive AUD.

AUD/USD - Technical analysis

The AUD/USD pair started the day with evident bearish sentiment, attempting to distance itself from the 0.6780 level. This reinforces the expectation of a continued bearish trend in the upcoming sessions, with the next main target anticipated at 0.6665.

The impact of the double top pattern remains in effect, further supporting the likelihood of reaching the awaited targets.

Additionally, the technical indicators are currently showing negative signals. It is important to note that a breach of the 0.6780 level would halt the expected decline and potentially lead to a price increase.

Traders will closely monitor the FOMC and Fed rate decision, which could significantly impact the AUD/USD pair's movement.

For today, the projected trading range is between the support level at 0.6700 and the resistance level at 0.6810.