Downward Pullback Could Repeat Off Same Resistance Level

Forex

Economic

Summary:

With the signal lines still embedded in bullish ground, one more push higher could take place before the corrective phase begins in earnest.

SELL AUDUSD

EXP

PENDING

0.70780

Entry Price

0.70100

0.71100

0.70592 +0.00063 +0.09%

Pips

PENDING

0.70100

Exit Price

0.70780

Entry Price

0.71100

The Australian economy delivered a positive surprise in June by posting a larger trade surplus than expected. Data from the Australian Bureau of Statistics showed exports increased 9.6% month-over-month, bouncing back from the previous month's contraction behind a surge in raw material shipments. On the other hand, imports slid 0.2%, aiding the overall trade balance improvement.

At the same time, inflation showed further signs of cooling. The Consumer Price Index (CPI) slowed to 3.8% year-over-year in June, landing below market forecasts. This shift markedly scaled back expectations for another Reserve Bank of Australia (RBA) rate hike, weighing on the Australian dollar.

In the wake of the data release, the implied probability of an August rate increase dropped sharply, signaling that markets are increasingly pricing in an extended pause in monetary policy. Still, central bank officials kept a cautious stance. RBA Assistant Governor Sarah Hunter pointed out that lower fuel prices were the main force behind the inflation drop, while noting that inflation remains above the 2%-3% target band.

Geopolitically, Iran has ruled out future talks with U.S. President Donald Trump, according to Iranian media reports and statements from Parliamentary advisors. These accounts indicate Tehran is not considering a return to negotiations with Washington until after the current U.S. presidential term ends in January 2029.

Rising Middle East tensions continue to drive energy prices upward. The 10-year U.S. Treasury yield climbed roughly six basis points to 4.705%, while West Texas Intermediate (WTI) crude surged over 6.7% to hit $82.29 per barrel.

In the United States, market focus shifts to the upcoming July Consumer Price Index (CPI) report. Headline inflation is expected to cool slightly to 3.4% year-over-year from 3.5% prior, with core inflation—which strip out volatile components—also projected to slip to 2.5% from 2.6%. Investors will also keep a close eye on the Producer Price Index (PPI) due out the following day.

Labor market indicators continue to point toward a soft landing in employment. Initial jobless claims dipped to 199,000, coming in slightly better than expected, while Challenger job cuts slowed to 33,400 from 45,800 previously. Overall, these metrics indicate that labor moderation is being driven mainly by slower hiring rather than elevated layoffs.

This pattern was mirrored in the ADP report, which showed private payrolls adding 44,000 jobs in July—below expectations and down from June's reading. In a similar vein, JOLTS job openings fell short of forecasts, keeping trader focus locked on the upcoming Non-Farm Payrolls (NFP) figures. Downward Pullback Could Repeat Off Same Resistance Level_1

Downward Pullback Could Repeat Off Same Resistance Level_1

Technical Analysis

AUDUSD is approaching resistance at 0.7078, a level untouched since mid-June when price suffered a sharp bearish rejection off that zone. A similar pattern could unfold here, triggering a downward correction toward the 0.7010 area. This target sits close to the 100-period moving average at 0.7008, while the 200-period moving average sits at 0.6969. Additionally, 0.7010 marks a key former resistance level that, having been broken to the upside, could now act as support—framing any leg lower as a corrective retracement rather than a trend reversal.

Turning to oscillators, the RSI is starting to show a subtle divergence; as price ticks gradually higher, the RSI has failed to follow suit and instead records lower peaks, pointing to a potential downside correction. Meanwhile, the MACD recently registered a bearish histogram cross into negative territory; if this depth expands, the pullback could gain traction. However, with the signal lines still embedded in bullish ground, one more push higher could take place before the corrective phase begins in earnest.

Trading Recommendations

Trading direction: Sell

Entry price: 0.7078

Target price: 0.7010

Stop loss: 0.7110

Validity: Aug 21, 2026 15:00:00

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Downward Pullback Could Repeat Off Same Resistance Level

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