Last week, the AUDUSD currency pair fell off the ascending channel, within which quotes had moved since late April. The price attempted to decline further but failed to break through the 0.642 level. The June low and the 200-day moving average, both located there, helped the Australian dollar rebound to 0.649. In recent months, this level served not only as resistance, but as support as well. Its retest will shape the future of the medium-term AUDUSD trend.
A sharp correction from the peak set on July 24, 2025, pushed technical indicators on the AUDUSD daily chart into oversold territory. The Stochastic Oscillator has already issued a buy signal, increasing the likelihood of breaking through the 0.649 level. Then, traders could target 0.653, the last key resistance before returning to highs of July.
AUDUSD buyers are unlikely to be deterred by the Reserve Bank of Australia’s (RBA) decision to cut interest rates at its August 12 meeting. This move is widely anticipated, especially after the unexpected pause in July. The US import duties against Australian goods remain unchanged at 10%, leaving the RBA little reason to accelerate monetary policy adjustments. A sharp drop in inflation could be such a reason, but recent Australian consumer price data has been mixed.
The country’s inflation rate for the second quarter was 2.1%—within the RBA’s target range. However, preliminary July data (released yesterday) suggests a potential monthly rise of 0.9%, the highest since December 2023. This leaves almost no room for deeper rate cuts, supporting the national currency, especially if the US dollar correction continues.
Consider the following trading strategy:
Buy AUDUSD at the current price. Take profit 1: 0.649. Take profit 2: 0.653. Stop loss: 0.642.
This content is for informational purposes only and is not intended to be investing advice.
