Australian Dollar recovers as mixed US data weakens the US Dollar

• AUD/USD recovers near 0.6980 after an initial Friday decline as the US Dollar weakens following mixed US economic data.
• US Housing Starts and Consumer Sentiment beat expectations, while Building Permits and Industrial Production disappointed.
• Fed’s Hammack warned that inflation remains broad-based and persistently high, but her remarks failed to provide lasting support to the Greenback.

AUD/USD trades higher near 0.6980 on Friday, recovering from an initial decline as the US Dollar (USD) loses ground following a mixed batch of United States (US) economic data. Stronger Housing Starts and Consumer Sentiment were offset by weaker Building Permits and subdued Industrial Production prints.

US Housing Starts increased to an annualized 1.43 million in June, beating expectations of 1.31 million and rising from 1.20 million previously. However, Building Permits declined to 1.37 million MoM, below the 1.40 million forecast and the previous 1.41 million. Building Permits are down 3.0% on an annual basis.

US Industrial Production rose only 0.1% MoM, missing expectations for a 0.2% increase and matching the previous reading. Meanwhile, the preliminary University of Michigan Consumer Sentiment Index improved to 54.4 in July from 49.5, exceeding the market forecast of 51.0. The Consumer Expectations Index also climbed to 54.0 from 50.7.

Federal Reserve (Fed) Bank of Cleveland President Beth Hammack maintained a cautious stance, saying inflation remains broad-based and persistently elevated. She noted that businesses are facing pressures from energy, insurance, supply-chain disruptions and the expansion of artificial intelligence (AI) data centers.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6982. The pair is sandwiched between the 20-period Simple Moving Average (SMA) at 0.6988, acting as immediate overhead resistance, and the 100-period SMA at 0.6934. This provides broader trend support, leaving the near-term bias neutral. The latest 14-period Relative Strength Index (RSI) around 52 suggests mildly constructive momentum but not enough to offset the nearby resistance cluster just above the market.

On the topside, initial resistance is seen at the horizontal barrier at 0.6986, followed closely by the 20-period SMA at 0.6988, with a more significant cap emerging at 0.7001. On the downside, nearby support is clustered at 0.6977 and 0.6974, while deeper structural support aligns with the 100-period SMA at 0.6934, which would come into view if sellers regain control.

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