Australian Dollar holds onto losses after Bullock keeps further rate hikes on the table

• AUD/USD falls around 0.3% and trades near the 0.6970 area following Bullock’s hawkish but growth-sensitive remarks.
• US Consumer Confidence declined to 90.8 in July from 92.2, limiting the Greenback’s advance.
• Australian CPI is expected to rise 0.2% MoM and remain at 4.0% YoY, keeping further RBA tightening in focus.

AUD/USD trades lower near the 0.6970 area on Tuesday, falling around 0.3% as the Australian Dollar (AUD) comes under pressure despite hawkish remarks from Reserve Bank of Australia (RBA) Governor Michele Bullock.

Bullock warned that underlying inflation remains too high and said that “some further easing in the growth of demand is likely to be required” to return inflation sustainably to the RBA’s 2%–3% target. She added that the Board remains prepared to act, “including by increasing the cash rate further if needed.” Although higher rates would normally support the Aussie, concerns that additional tightening could weaken domestic activity and the labor market weighed on the currency.

In the United States (US), the Conference Board Consumer Confidence Index declined to 90.8 in July from an upwardly revised 92.2 in June, instead of the modest improvement anticipated by markets. The Present Situation Index also fell for a third consecutive month to 114.9, while the Expectations Index remained unchanged at 74.7.

Attention now turns to Australia’s June Consumer Price Index on Wednesday. Headline CPI is expected to rise 0.2% MoM after falling 0.7% previously, while annual inflation is forecast to remain elevated at 4.0%. Trimmed Mean CPI is projected to increase 0.4% MoM, matching the previous reading, with the annual underlying measure previously standing at 3.6%.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6969, maintaining a bearish near-term bias as the pair holds beneath both the 100-period Simple Moving Average (SMA) at 0.6971 and the 20-period SMA at 0.6983. The cluster of nearby overhead barriers suggests rallies are likely to be sold into for now, while the Relative Strength Index (RSI) around 41 points to soft momentum rather than outright oversold conditions, hinting that sellers still retain control but lack strong follow-through.

On the topside, initial resistance is aligned at the 100-period SMA around 0.6971, followed by horizontal caps at 0.6975 and the 0.6981 region, where the day’s open also sits, before the 20-period SMA at 0.6983 and the higher barrier at 0.6987 come into play. On the downside, immediate support emerges at the horizontal level of 0.6964; a sustained break below this floor would expose lower levels, while holding above it could encourage another test of the dense resistance band overhead.

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