Australian Dollar trades sideways after softer Australian inflation

• AUD/USD holds near 0.6930 as softer Australian inflation limits demand for the Aussie.
• Australia’s TD-MI Inflation Gauge eased to 3.9% YoY in June from 4.4%.
• US S&P Global Services PMI slipped to 51.2, while ISM Services PMI matched expectations at 54.

AUD/USD trades with a cautious tone, sideways near the 0.6930 level on Monday after Australian inflation data showed further easing price pressures, while mixed United States (US) services figures kept the US Dollar (USD) broadly supported but without strong momentum.

Australia’s TD-MI Inflation Gauge slowed to 3.9% YoY in June, down from the previous 4.4%, suggesting domestic inflation pressures are losing strength. The softer reading could reduce pressure on the Reserve Bank of Australia (RBA) to maintain a more hawkish stance, weighing on the Australian Dollar (AUD).

In the United States, the S&P Global Composite Purchasing Managers Index (PMI) eased to 51.9 in June from 52.2, while the Services PMI slipped to 51.2, below expectations of 51.4 and slightly under the previous 51.3. The data pointed to slower but still positive private-sector activity, limiting aggressive USD upside.

The ISM Services PMI came in at 54, matching expectations but easing from 54.5 previously. Under the surface, the Employment Index improved sharply to 51.2 from 47.9, signaling renewed hiring strength in the services sector. However, New Orders eased to 55.1 from 57.3, while Prices Paid fell to 67.7 from 71.3, suggesting that demand and cost pressures cooled.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6936. The pair holds a neutral to mildly constructive tone as it trades above the 20-period Simple Moving Average (SMA) at 0.6919 but remains capped below the 100-period SMA at 0.6962. A nearby pivot at 0.6935 is being probed, while the Relative Strength Index (RSI) around 57 hints at steady but not overextended bullish momentum within this short-term consolidation.

On the topside, initial resistance is seen at 0.6944, with the higher 100-period SMA at 0.6962 forming the next cap and defining a broader supply zone. On the downside, the immediate pivot support sits just below at 0.6935, followed by clustered horizontal floors at 0.6929 and 0.6924, which together underpin the pair and would need to give way to revive a deeper bearish phase.

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