Australian Dollar remains resilient near two-month high ahead of Fed Minutes

• AUD/USD gains 0.12% on Tuesday and trades around 0.7115, remaining close to its highest level in more than two months.
• The US Dollar rebound and inflation concerns stemming from higher Oil prices limit the pair’s advance.
• The Australian central bank’s hawkish bias supports the Australian Dollar, while investors await the US central bank Minutes.

AUD/USD edges higher on Tuesday and trades around 0.7115 at the time of writing, up 0.12% on the day. The pair remains close to Monday’s peak of 0.7129, its highest level in more than two months, but struggles to extend its advance as the US Dollar (USD) attempts to rebound after touching a two-month low.

The Greenback finds some support as rising Oil prices fuel concerns about a potential resurgence in inflationary pressures in the United States (US). More persistent inflation could encourage the Federal Reserve (Fed) to maintain a restrictive monetary policy stance for longer, limiting selling pressure on the US Dollar and, in turn, capping the AUD/USD pair.

Geopolitical tensions between the US and Iran also contribute to renewed demand for the US Dollar. Concerns surrounding the Strait of Hormuz remain in focus, while escalating tensions in the Middle East push Oil prices to a two-week high. A sustained increase in energy costs could reinforce inflation risks and complicate the Fed’s monetary easing path.

Investors remain cautious, however, ahead of the release of the Federal Open Market Committee (FOMC) Minutes on Wednesday. The account of the latest meeting could provide fresh clues about Fed officials’ assessment of inflation risks and the future path of US interest rates.

On the Australian side, the hawkish stance of the Reserve Bank of Australia (RBA) continues to support the Australian Dollar (AUD). RBA Governor Michele Bullock recently sought to push back against the dovish interpretation of the latest monetary policy decision, stressing that the Board had considered both keeping rates unchanged and raising them.

Investors will also monitor Australian employment data for July on Thursday, which could provide fresh clues about the strength of the labor market and influence expectations for the RBA’s next policy decisions.

AUD/USD technical analysis

In the one-hour chart, AUD/USD trades at 0.7113, maintaining a mildly bullish near-term bias as it holds above the 100-period simple moving average (SMA) at 0.7083 and the 200-period SMA at 0.7068. The pair is also trading above the horizontal support at 0.7095, suggesting a constructive tone while the Relative Strength Index (RSI) around 58 hints at positive but not overstretched momentum.

On the topside, initial resistance is seen at the horizontal barrier at 0.7129, where buyers may face the next test. On the downside, immediate support is located at 0.7095, followed by the 100-period SMA at 0.7083 and then the 200-period SMA at 0.7068, which together form a broader demand layer underpinning the hourly trend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)