AUD/USD Faces Potential Reversal: Key Supply Zones in Focus

8 juil.

Despite a backdrop of improved risk aversion on Monday, the Australian Dollar (AUD) appreciated, bolstered by domestic economic factors. Persistent high inflation, robust Retail Sales, and a strong Services PMI have provided support to the AUD, leading the Reserve Bank of Australia (RBA) to delay potential rate cuts. However, this upward momentum is tempered by renewed demand for the US Dollar (USD), which puts pressure on the AUD/USD pair.

The USD's outlook is complicated by recent US employment data. While Nonfarm Payrolls (NFP) for June exceeded market expectations, the growth rate was slower compared to May's increase. Additionally, the Unemployment Rate edged higher in June. These indicators suggest that the Federal Reserve (Fed) might face pressure to consider reducing interest rates sooner than anticipated, which could weigh on the USD.

In our analysis, the AUD/USD price is nearing a significant area marked by recent Supply zones, where we anticipate a potential price reversal. These zones are critical as they align with historical trends; over the past two years, the AUD has typically started a bearish trend around this time of year. This seasonal pattern, combined with the technical presence of Supply zones, informs our strategy to look for a short setup.

In conclusion, the Australian Dollar's recent appreciation is supported by strong domestic economic indicators, but the potential for a bearish reversal looms. The combination of Supply zones and historical seasonality trends points to a possible downturn. We will be closely monitoring these factors to execute a well-timed short trade.

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