Rejection Off Upper Channel Boundary Opens Door to Selling Opportunities

Forex

Economic

Summary:

If price fails to break above this resistance, a downward correction could get underway toward the lower boundary of the channel.

SELL AUDUSD

EXP

PENDING

0.70850

Entry Price

0.69600

0.71250

0.70549 -0.00037 -0.05%

Pips

PENDING

0.69600

Exit Price

0.70850

Entry Price

0.71250

In Australia, the RBA held its benchmark interest rate steady at 4.35%, as anticipated, with Bullock maintaining a hawkish tone that pointed to a possible rate hike in the coming months. The RBA Governor also noted that the domestic economy continues to operate "above capacity" and emphasized that economic growth must slow down to contain inflationary pressures.

In parallel, 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 RBA rate hike, weighing on the Australian dollar.

Data published by the U.S. Bureau of Labor Statistics showed that the headline Producer Price Index (PPI) remained unchanged in July, following a 0.1% decline in June. On an annual basis, producer inflation slowed to 4.7% from 5.5% previously. Meanwhile, core PPI rose 0.2% month-over-month, decelerating from the 0.4% recorded in the prior period, while its annual rate dropped to 4.2% from 4.7%.

These figures build upon Wednesday's Consumer Price Index (CPI) report, which also lined up closely with market expectations. The combination of cooler inflation prints has prompted investors to dial back expectations for an upcoming rate hike by the Federal Reserve (Fed)—a trend that initially gathered steam after July's disappointing Nonfarm Payrolls (NFP) report.

According to the CME FedWatch Tool, markets are currently pricing in roughly a 32% probability of a rate hike in September, down sharply from 55% a week ago. This shift in expectations has driven a more pronounced drop in short-term U.S. Treasury yields, whereas the decline across longer maturities has been more restrained as elevated energy prices keep inflation risks tilted to the upside. Rejection Off Upper Channel Boundary Opens Door to Selling Opportunities_1

Rejection Off Upper Channel Boundary Opens Door to Selling Opportunities_1

Technical Analysis

AUDUSD is moving within an ascending channel that recently tested the upper boundary after touching the 0.7089 level, reacting lower shortly after. If price fails to break above this resistance, a downward correction could get underway toward the lower boundary of the channel near the 0.6960 area, where local support also coincides with the 0.50 and 0.618 Fibonacci retracement levels. Meanwhile, the 100 and 200-period moving averages sit at 0.7018 and 0.6983, respectively, tracking closely within the bullish channel structure.

Turning to oscillators, the RSI sits at 51 in neutral ground after reaching 69 on July 30, nearly tapping overbought territory. The oscillator has not retested those peaks even as price printed slightly higher highs, creating a divergence that could signal a shift in bias. Meanwhile, the MACD shows a bearish histogram that currently lacks depth, though the signal lines are drifting toward the neutral mark; a downward crossover could add weight to a growing bearish momentum.

Trading Recommendations

Trading direction: Sell

Entry price: 0.7085

Target price: 0.6960

Stop loss: 0.7125

Validity: Aug 25, 2026 15:00:00

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Rejection Off Upper Channel Boundary Opens Door to Selling Opportunities

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