Australian Dollar falls after US Retail Sales meet consensus

• AUD/USD weakens after decent US Retail Sales reinforce confidence in the US economy.
• Hot US PPI data and high Treasury yields support expectations for higher Fed rates.
• Trump and Xi discussed stronger economic cooperation and increased trade access.

The AUD/USD pair weakens toward the 0.7220 region on Thursday as the United States (US) Dollar (USD) strengthens after April Retail Sales held up in the United States (US).

Support for the USD emerged after US Retail Sales rose 0.5% in April, meeting market expectations and highlighting the continued resilience of consumer spending despite elevated borrowing costs. The retail data, which dropped from 1.6% in March, reinforces confidence in the underlying strength of the US economy and further supports expectations that the Fed could maintain a restrictive policy stance for longer.

The latest US Producer Price Index (PPI) report showed producer inflation surged 1.4% MoM in April, while annual PPI accelerated to 6.0%, marking the strongest increase in more than three years. The hotter inflation figures pushed US Treasury yields higher on Wednesday, although they are somewhat declining on Thursday, and boosted the Greenback across the board as traders scaled back expectations for Fed rate cuts and increasingly priced in the possibility of additional tightening later this year.

According to a White House official, the meeting between US President Donald Trump and Chinese President Xi Jinping was described as “good,” with both leaders discussing ways to enhance economic cooperation between the world’s two largest economies. The two sides reportedly explored expanding market access for American businesses into China, increasing Chinese investment, and boosting Chinese purchases of US agricultural products.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7223, maintaining a mildly bearish near-term bias as it slips below the 20-period Simple Moving Average (SMA) at 0.7241 while holding above the 100-period SMA at 0.7197. The pair is pivoting around the horizontal level at 0.7223, and the Relative Strength Index (RSI) near 44 suggests fading momentum, hinting that sellers retain the upper hand while buying interest emerges on dips.

On the topside, immediate resistance is clustered near 0.7239 and the 20-period SMA at 0.7241, with a further cap at the horizontal barrier around 0.7243. On the downside, initial support sits at the 0.7223 pivot, followed by the horizontal floor at 0.7220, while the 100-period SMA around 0.7197 offers a deeper layer of demand if downside pressure extends.

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