Resistance Wall Holds Firm, Raising Prospects for a Deeper Downward Correction

Forex

Economic

Summary:

The RSI currently sits at the 46 level, beneath the neutral threshold and moving in tandem with price action. With the RSI positioned below 50, bearish dominance could persist.

SELL AUDUSD

EXP

PENDING

0.70000

Entry Price

0.69270

0.70600

0.69724 -0.00161 -0.23%

Pips

PENDING

0.69270

Exit Price

0.70000

Entry Price

0.70600

The latest economic data from Australia reinforced the perception of an economy that continues to show resilience. Employment increased by 76.3k positions during June, coming in well above the 15k expected by the market and the 44k recorded the previous month. The growth was driven both by full-time employment, which advanced by 29.3k jobs, and by part-time employment, which added 47k positions. At the same time, the participation rate rose to 67.0% from 66.7%, while the unemployment rate held steady at 4.4%.

Positive signals also extended to business activity. Preliminary data from S&P Global showed that the Manufacturing PMI advanced to 51.7 in July from 51.5, while the Services PMI recorded a more pronounced improvement, reaching 53.0 compared to 50.5 in June. As a result, the Composite PMI rose to 52.6 from 50.4, pointing to an acceleration of economic growth at the start of the third quarter.

Upcoming speeches by RBA Governor Michele Bullock on Tuesday and Assistant Governor Sarah Hunter on Thursday could offer further guidance on monetary policy ahead of the RBA's next decision on August 11. RBA cash rate futures currently price in a 30% probability of a 25-basis-point rate hike in August, while fully pricing in an increase to 4.60% by year-end.

The geopolitical situation in the Middle East showed signs of temporary stabilization at the beginning of the week. U.S. Ambassador to the United Nations Mike Waltz noted that President Donald Trump is granting room for diplomatic efforts, although he keeps all military options on the table. In the same vein, Tehran indicated it will refrain from launching new attacks provided Washington adopts a similar stance.

This backdrop triggered a sharp initial drop in oil prices, driven by expectations of reduced risks to global supply. However, the movement quickly lost momentum due to lingering uncertainty. Iranian Foreign Ministry spokesman Esmaeil Baghaei affirmed that the situation in the Strait of Hormuz remains unchanged and that this strategic maritime route continues to be closed.

In the United States, market focus is also directed toward monetary policy. Donald Trump praised Federal Reserve Chair Kevin Warsh and stated for the first time that interest rates should be reduced, though he acknowledged that final decisions rest with the monetary policy committee as a whole.

For his part, Treasury Secretary Scott Bessent defended the tax cuts promoted by the Trump administration, arguing they have provided significant relief to American households, particularly those with low and middle incomes.

Against this backdrop, Wednesday's Federal Reserve monetary policy meeting shapes up as the main point of interest for the week, alongside Thursday's release of the personal consumption expenditures (PCE) price index. Although consensus expects the Fed to keep rates unchanged, markets still assign a relevant probability to a potential additional adjustment in coming months. In fact, expectations for September continue to point to a high likelihood of a fresh rate hike. Resistance Wall Holds Firm, Raising Prospects for a Deeper Downward Correction_1

Resistance Wall Holds Firm, Raising Prospects for a Deeper Downward Correction_1

Technical Analysis

AUDUSD has encountered a wall preventing further upside at the 0.7022 level, a zone where price action has reacted downward on three separate occasions. Consequently, we could see a deeper correction unfold toward the local support area at 0.6927. Meanwhile, the 100 and 200-period moving averages sit closely aligned at 0.6968; a decisive close below this zone could accelerate the downward momentum.

Looking at the oscillators, the RSI currently sits at the 46 level, beneath the neutral threshold and moving in tandem with price action. With the RSI positioned below 50, bearish dominance could persist. Simultaneously, the MACD histogram shows minimal depth while the signal lines remain centered in neutral territory; should a downward tilt emerge, price action could easily continue along its bearish path.

Trading Recommendations

Trading direction: Sell

Entry price: 0.7000

Target price: 0.6927

Stop loss: 0.7060

Validity: Aug 07, 2026 15:00:00

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Resistance Wall Holds Firm, Raising Prospects for a Deeper Downward Correction

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