Flat trading for Australian Dollar vs US Dollar as weak retail sales and investment data from China emerge

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Australian Dollar drops 0.76% to $0.7013

Highlights

The Reserve Bank of Australia maintained its cash rate at 4.35%, signaling a steady policy approach amid persistent inflation concerns.
Weaker Chinese retail sales and investment continue to weigh on the Australian Dollar by reducing trade-driven demand.
AUD/USD shows prevailing bearish momentum with price expected to remain range-bound between $0.6978 and $0.7048 in the near term.

Yield stability and Chinese demand signal weigh on AUD outlook

The Reserve Bank of Australia's decision to keep its cash rate target unchanged at 4.35 percent during its June policy meeting signals a measured approach to monetary policy and maintains the current yield environment for the Australian Dollar. The central bank also noted that inflation is expected to remain high, which may affect future policy actions and impacts investor expectations around the currency’s outlook. Meanwhile, mixed economic signals from China — with weakness in retail sales and investment overshadowing industrial output gains — have dampened demand for the Australian Dollar through trade-linked channels.

Oversold conditions emerge as technical sellers dominate intraday

On the hourly chart, AUD/USD trades below both the MA-20 and MA-50, highlighting recent short- and medium-term selling pressure. However, the price remains above the MA-200 on the daily chart, indicating a potential base of long-term support. The Ichimoku Kijun line acts as immediate resistance at $0.7035, while support is established near $0.6978. Momentum indicators show MACD signaling Sell and the ADX at Neutral, with the RSI at 20.73, Stoch RSI, and CCI all reflecting oversold conditions. BBP confirms seller dominance in intraday momentum, and the Awesome Oscillator further supports a strong sell bias, though the clustering of oversold readings suggests a possible divergence.

Volatility band defines short-term risks with rebound contingent on resistance

In the short term, AUD/USD is expected to fluctuate between $0.6978 and $0.7048, reflecting a typical volatility band for the upcoming two to three trading days. The probability of a significant upward move is low, with downside risks remaining elevated. A rebound scenario would only be likely if resistance at $0.7035 is decisively cleared, while a break below $0.6978 would signal renewed selling pressure and open up further downside.

Viktoras Karapetjanc, analyst at Traders Union, notes that the Reserve Bank of Australia’s steady rate and caution on inflation set a neutral policy tone. He sees the macro backdrop as challenging, with mixed signals from China dampening AUD sentiment. The technical picture shows sellers in control near term, but longer-term support is intact. Karapetjanc remains moderately optimistic, stating: "If global sentiment steadies and resistance at $0.7035 breaks, the Australian Dollar could see a constructive rebound from current levels."

Earlier, analysts noted that the Australian Dollar was underpinned by longer-term support despite persistent short- and medium-term selling pressure. The latest retreat below key moving averages alongside oversold technical readings adds a new layer of caution, with a decisive move below $0.6978 now a critical risk to monitor for continued downside momentum.

Source of Data: AUD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.