- AUD/USD extends its consolidative price move as traders keenly await the key US inflation data.
- RBA rate hike bets continue to act as a tailwind for the Aussie amid the JPY-led USD weakness.
- The constructive technical setup backs the case for an extension of a well-established uptrend.
The AUD/USD pair holds steady above the 0.7200 mark through the Asians session on Thursday and remains close to its highest level since May 14, touched earlier this week. Traders seem hesitant and opt to wait for the key US inflation data for more cues about the Federal Reserve’s (Fed) policy path, which will drive the US Dollar (USD) and provide a fresh impetus to the currency pair.
In the meantime, USD bulls remain on the defensive amid a hawkish Bank of Japan (BoJ)-inspired rally in the Japanese Yen (JPY), acting as a tailwind for the AUD/USD pair. Furthermore, rising bets for another interest rate hike by the Reserve Bank of Australia (RBA) later this month continue to support the Australian Dollar (AUD) and back the case for further near-term gains.
Meanwhile, traders have been pricing in a greater chance that the US central bank will raise borrowing costs at its upcoming policy meeting on September 15-16. Apart from this, a further escalation of tensions between the US and Iran offers some support to the safe-haven Greenback, which, in turn, holds back AUD/USD bulls from positioning for any further appreciating move.
From a technical perspective, the recent move higher from the August monthly low has been along an upward-sloping channel. This points to a well-established uptrend and suggests that the path of least resistance for the AUD/USD pair remains to the upside. However, mixed momentum oscillators might keep spot prices capped near the top boundary of the aforementioned channel.
In fact, the Relative Strength Index (RSI) is around 58, suggesting firm but not overstretched buying pressure. In contrast, the slightly negative Moving Average Convergence Divergence (MACD) line hints at a modest loss of upside momentum rather than a clear reversal. However, a break above the channel resistance at 0.7260 should pave the way for an extension of the uptrend.
On the downside, initial support is seen at the 100-period SMA around 0.7172, ahead of the channel floor near 0.7161, where a drop below would undermine the current bullish structure and signal a deeper corrective phase within the broader advance.
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