Australian dollar slips after five-day rally as focus shifts to us data and fed outlook

Daily Currency Update

The Australian Dollar (AUD) edged lower against the US Dollar (USD) on Tuesday, retreating after a five-day winning streak. The pullback in the AUD/USD pair comes as the greenback gains momentum, supported by persistent inflationary pressures in the United States. These inflation concerns have reignited uncertainty around the timing and extent of potential interest rate cuts by the US Federal Reserve (Fed), prompting a cautious tone in currency markets. Investor attention is now turning to the upcoming release of the US ISM Manufacturing Purchasing Managers’ Index (PMI) for August, which could offer further clues about the health of the US economy and influence the Fed’s policy outlook. As of the latest trading session, the AUD/USD pair is hovering near the 0.6550 level. From a technical standpoint, the daily chart shows the pair maintaining its position above a key ascending trendline, reinforcing a bullish bias. Additionally, the pair remains above the 9-day Exponential Moving Average (EMA), suggesting continued short-term upward momentum. On the upside, initial resistance is seen at the five-week high of 0.6568, reached on August 14. A break above this level could pave the way for a retest of the nine-month high at 0.6625, recorded on July 24, potentially signaling a continuation of the broader uptrend. Conversely, immediate support is located at the confluence of the ascending trendline and the 9-day EMA at 0.6520, followed closely by the 50-day EMA at 0.6502. A decisive break below this critical support zone would likely shift market sentiment to bearish, exposing the pair to a potential decline toward the three-month low of 0.6414, marked on August 21. Overall, while technical indicators suggest short-term strength in the AUD/USD pair, the broader direction remains contingent on US economic data and evolving Fed rate expectations.