Traders buy back AUDUSD’s drawdown amid another US dollar decline

The AUDUSD currency pair saw a sharp drawdown during Monday's trading session, but all losses were eventually recovered. Today, the Australian currency continues to rise against the US one, with quotes already testing the 0.65 level. At such a pace, the pair could retest its previous highs in the coming days. Recent developments continue to weigh on the greenback.

In recent hours, Donald Trump has already pleased dollar sellers twice. First, he announced a ceasefire in the Middle East, reducing demand for the US currency and other safe-haven assets. Then, the President again criticized Fed Chair Jerome Powell's decision not to cut interest rates. Today, the official is set to testify before Congress and may face increasing pressure to ease monetary policy in the country.

A shift in other Fed members’ rhetoric toward lowering borrowing costs has become more noticeable lately. In their latest statements, Christopher Waller and Michelle Bowman emphasized the need to consider rate cuts at the next meeting on July 30. They argue that tariffs' inflationary impact will likely be short-lived. Meanwhile, the US labor market continues to cool, as evidenced by rising unemployment rates among college graduates.

Meanwhile, Australia’s economy showed improvement in June. According to S&P Global data, the country’s composite Purchasing Managers’ Index (PMI) rose from 50.2 to 51.2 points. The export decline was fully offset by strong domestic demand. The labor market dynamics remained positive. This may help AUDUSD climb to a seven-month high of 0.655.

From a technical perspective, the pair's rebound from the 50-day moving average provides support for another upward wave. As long as it maintains above this level, the baseline scenario favors further gains.

Consider the following trading strategy:

Buy AUDUSD near the level of 0.65. Take profit — 0.655. Stop loss — 0.643.