See today’s full USD/JPY forecast with chart setups and trade ideas.
AUD/USD: Aussie Inflation to Spotlight the RBA
Turning to the AUD/USD pair, inflation indicators will influence the RBA rate path. Economists forecast the TD-MI Inflation gauge to rise 0.2% month-on-month in July after June’s 0.1% increase.
Given that economists consider the inflation gauge as a leading inflation indicator, rising trends would signal higher inflation. A pickup in inflationary pressures may ease expectations of multiple RBA rate cuts, lifting demand for the Aussie dollar. Conversely, a softer print may fuel speculation about further rate cuts after August’s widely expected rate cut. A more dovish RBA stance could weigh on the Aussie dollar.
AUD/USD: Key Scenarios to Watch
- Bearish AUD/USD Scenario: Softer-than-expected Aussie inflation data or dovish RBA rhetoric. These factors could push AUD/USD toward the 200-day EMA, exposing the 0.64 support level.
- Bullish AUD/USD Scenario: Hotter-than-expected Aussie inflation numbers or hawkish RBA signals. These factors could send AUD/USD toward the 50-day EMA and the crucial $0.65 resistance level.
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AUD/USD Daily Outlook: US Factory Orders and Rate Differentials
Later today, US factory orders will influence sentiment toward the US economy and US-Australian interest rate differentials.
An unexpected rise in orders may ease fears of a US recession and expectations of multiple Fed rate cuts. A less dovish Fed rate path would widen the rate differential in favor of the US dollar, dragging AUD/USD toward the 200-day EMA. A drop below the 200-day EMA would bring the $0.64 level into play.
On the other hand, a larger-than-expected fall in orders may fuel stagflation fears, lifting bets on multiple Fed rate cuts. A narrower rate differential could send AUD/USD toward the 50-day EMA and the $0.65 resistance level. A sustained move above the $0.65 level may enable the bulls to target the July high of $0.6625.
