The Australian dollar has retreated from its June high against the US dollar, with the AUD/USD pair now trading around 0.7065, as profit-taking and a firmer greenback stall the recent uptrend. The pullback follows a period of strength supported by resilient commodity prices and a hawkish Reserve Bank of Australia (RBA), but the market mood has shifted ahead of critical US inflation data.
The decline was initially cushioned by Australia’s stronger-than-expected trade surplus, which widened to AUD 7.47 billion in December, well above the forecast of AUD 6.5 billion. However, the boost proved fleeting as traders quickly refocused on the upcoming US Consumer Price Index (CPI) report. The CPI print is expected to shape expectations for the Federal Reserve’s rate path, with a hotter reading likely to strengthen the USD and drag the pair lower, while a softer figure could revive hopes of rate cuts and lift the Aussie.
From a technical perspective, support is now seen at 0.7065, aligning with the 23.6% Fibonacci retracement of the May–June rally. A decisive break below that level could open the door to 0.7020 and the psychological 0.7000 mark. On the upside, a move back above 0.7100 is needed to resume the uptrend. Momentum indicators are mixed: the RSI has cooled from overbought territory, while the MACD remains above its signal line, suggesting the broader trend is still constructive.
The RBA has kept rates at 4.35% and maintained a hawkish tone, but softer domestic data, including a weak jobs report, has tempered expectations for further tightening. At the same time, the US dollar has drawn strength from solid services-sector data and a recalibration of Fed rate-cut probabilities, with the CME FedWatch tool showing reduced odds for a September move. This policy divergence is a key driver of the pair.
For crypto markets, the AUD/USD trend is a barometer of global risk sentiment. A sustained USD rally on strong CPI could weigh on bitcoin and altcoins, as higher-for-longer rates typically damp appetite for risk assets. Conversely, any disappointment in inflation could weaken the dollar and offer a tailwind to digital currencies.
