Converging triangle suggests AUDUSD could retest support at 0.642

The AUDUSD currency pair has gained support at the 0.642 level, following its pullback from the yearly high of 0.662. Although this threshold prevents quotes from declining further, it does not allow them to return to the previous ascending channel. Friday’s bullish impulse struggled to overcome the 0.648 level, where the price was pressured by a descending trendline from the July peak. In tandem with support at 0.642, it is forming a converging triangle, highlighting the risk of a steeper correction.

The rise in AUDUSD is also capped by the middle Bollinger Band and the 50-day moving average. The MACD indicator remains in negative territory, with no signals of an upward reversal. On the four-hour timeframe, the pair managed to recoup half of its previous losses, hitting the 50% Fibonacci retracement (0.649). A break below the 61.8% Fibonacci level (0.645) would confirm a new wave of selling pressure on the Australian dollar.

The minutes from the Reserve Bank of Australia’s (RBA) August 12 meeting—released today—were another catalyst for the national currency’s weakness. The regulator stated its intention to continue cutting rates, noting that inflation risks substantially outweigh concerns about employment. According to a Reuters survey, markets expect the RBA to take a pause in September and resume its easing cycle in November.

Tomorrow, the publication of July inflation data could trigger significant volatility in AUDUSD. In late June, the Consumer Price Index (CPI) fell below 2%, and the upcoming release may confirm whether this trend is stabilizing. In the United States, Personal Consumption Expenditures (PCE) indices are scheduled for Friday. The Fed considers these indicators key inflation gauges, meaning the data could clarify the outcome of the central bank’s September 17 meeting.

Consider the following trading strategy:

Selling AUDUSD at the current price. Take profit: $0.642. Stop loss: $0.653.