The Australian Dollar strengthened against the US Dollar during Wednesday’s Asian trading session, July 8, lifting the AUD/USD pair by 0.23% to around 0.6943. The rally came as investors reacted positively to fresh hawkish remarks from the Reserve Bank of Australia (RBA), reinforcing expectations that interest rates could remain elevated if inflation stays above target.
Among major currencies, the Australian Dollar outperformed nearly all of its peers, with only the New Zealand Dollar posting stronger gains during the session.
The Australian Dollar recorded gains against most major currencies, reflecting growing confidence in the country’s monetary policy outlook. The only major currency outperforming the Aussie was the New Zealand Dollar.
Market sentiment improved after RBA Assistant Governor Sarah Hunter emphasized that the central bank remains prepared to take further action if necessary to return inflation to its target. Hunter also noted that while higher oil prices have increased inflation risks, they have not yet caused a significant slowdown in Australia’s economy.
The RBA has already raised interest rates three times this year, with each increase amounting to 25 basis points. Those moves have lifted the Official Cash Rate to 4.35%, highlighting the central bank’s continued focus on containing inflation.
Investors Watch China CPI
Attention is now shifting toward several key economic events that could determine the next direction for AUD/USD. China is scheduled to release its Consumer Price Index (CPI) data for June on Thursday. Since China is Australia’s largest trading partner, stronger or weaker inflation figures could significantly influence demand for the Australian Dollar.
Meanwhile, traders are also awaiting the release of the Federal Open Market Committee (FOMC) Minutes from the US Federal Reserve’s June policy meeting at 18:00 GMT. The minutes are expected to provide fresh insights into the Fed’s interest rate outlook, which could drive further volatility in the US Dollar.
At the time of writing, AUD/USD is trading near 0.6944. Despite the recent rebound, the pair continues to face short term technical pressure. The pair remains below the 20 period Exponential Moving Average (EMA) at 0.6967, indicating that bullish momentum is still limited.
In addition, the Relative Strength Index (RSI) stands at 42.75, remaining below the neutral 50 level and suggesting selling pressure persists, although it is not yet extreme. For buyers to regain stronger momentum, AUD/USD must break above the 0.6967 resistance level, which aligns with the 20-period EMA.
A successful breakout could pave the way for a broader recovery. On the downside, the first major support is located at 0.6865, the low recorded on June 30. If that level fails to hold, the next downside target is 0.6833, the low from March 30.
For now, traders remain focused on upcoming economic data from both the United States and China, which are likely to determine whether AUD/USD can extend its recent gains or resume its broader downward trend.
