Selling AUDUSD with 0.68350 target amid lower expectations of RBA rate hike

AUDUSD is currently settling near 0.68900 after a lengthy decline, with the odds of further downside remaining high. What triggered this? Australia’s trade balance for May might be the prime suspect. The report revealed a deficit of A$3 billion—the worst reading since 2015—which has deteriorated the country’s external position and undermined investor confidence in the national currency.

The domestic landscape offers little comfort as well. A ripple effect has recently come into play: de-escalating geopolitical tensions in the Middle East have pushed crude prices lower and cooled inflation risks. As a result, the likelihood of an August rate hike by the Reserve Bank of Australia has plunged from 50% to 15%. The narrower the monetary gap between the US Federal Reserve (Fed) and the RBA becomes, the weaker the Aussie grows, losing its investment appeal.

Everything is far rosier in the United States. The American dollar continues to draw support from a robust labor market and rising expectations of tighter Fed policy. Of course, Kevin Warsh has just softened his rhetoric on inflation, but the market remains unconvinced. There is now a nearly 66% probability of a rate hike by the Fed as early as September. Today’s employment data could provide additional growth for the USD if the report exceeds forecasts. The greenback is also benefiting from steady capital flows into AI-related assets.

The technical picture aligns with the fundamental outlook. AUDUSD remains well below its May peak of 0.72766. A recent flat trend, with no reversal signs, has reinforced bearish momentum. The Chaikin Oscillator, though rebounding from the June low toward the zero line, is still siting in negative territory, signaling that sellers, while weaker, remain in control.

Consider the following trading strategy:

Sell AUDUSD at 0.68900. Place Take profit at 0.68350 and Stop loss at 0.69300.

This forecast is valid from July 2 till July 9, 2026.