AUD/USD bounces up from 0.6500 lows as the US Dollar rally loses steam

The AUD/USD has found some support at the 0.6500 area, but it remains limited below 0.6530, practically flat on the day. The pair is consolidating losses with the immediate bias still bearish, following a nearly1.6% sell-off from last week’s highs.

AUD/USD Technical Overview

The AUD/USD pair is trading around 0.6520 on Tuesday. The daily chart’s technical analysis indicates a prevailing bullish bias as the pair remains within the ascending channel pattern. However, the 14-day Relative Strength Index (RSI) has moved below the 50 mark, indicating that a bearish bias is active. Additionally, the pair is positioned below the nine-day Exponential Moving Average (EMA), indicating that short-term price momentum is weaker.

Fundamental Overview

A batch of upbeat US macroeconomic figures, namely the strong weekly Jobless Claims and the growing business activity figures released last week, cast further doubts about the chances of a Fed rate cut in the coming months, and provided additional support to the US Dollar.

US Dollar rallies on trade deals with the Fed on focus

Meanwhile, the US keeps cutting deals with some of its major trade partners, which is giving additional support to the Dollar. The trade pact with the EU has proved far more beneficial for the US than for the Eurozone’s economy, and US representatives are in talks with China in Stockholm, aiming to smooth their commercial relations further.All in all, trade uncertainty is vanishing gradually, and with investors focusing on a slew of key US macroeconomic indicators, including the Fed's monetary policy decision due on Wednesday, the US Dollar’s downside attempts are likely to remain limited.Also on Wednesday, Australian Consumer Prices Index data are expected to show that inflationary pressures eased further in June, which might boost the RBA’s confidence to ease monetary policy further in the near term. If these figures are confirmed, the risk for the AUD is skewed to the downside.