AUD/USD Faces Downside Pressure Amidst Weak Inflation Data

During the Asian session, the AUD/USD pair found intermediate support near the critical level of 0.6660. However, several factors are expected to contribute to its continued downward trajectory. Notably, China’s Consumer Price Index (CPI) reflects stagnant monthly inflation and a deceleration in the annual CPI, while the Producer Price Index (PPI) indicates vulnerability in both domestic and export demand.

In terms of technical analysis, the AUD/USD pair has encountered strong resistance from the downward-sloping trendline of a Descending Triangle chart pattern observed on a two-hour scale. The trendline originates from the June 27 high at 0.6720, while horizontal support is established by the June 29 low at 0.6595. Supporting the Australian Dollar bulls, the 50-period Exponential Moving Average (EMA) at 0.6620 provides some stability.

The Relative Strength Index (RSI) (14) currently oscillates within the range of 40.00-60.00, indicating a non-directional performance and further reflecting the uncertainty surrounding the AUD/USD pair.

If the AUD/USD pair convincingly breaks below the June 29 low at 0.6595, it is expected to extend its decline towards the June 02 low at 0.6565, followed by the round-level support at 0.6500. Conversely, a clear break above the July 04 high at 0.6705 would open the possibility for potential gains towards the June 23 high at 0.6767, with the round-level resistance at 0.6800 becoming the next target.