Australian Dollar hits fresh high since June 5 as bearish USD outweigh weak China data

• AUD/USD scales higher for the second straight day amid the prevailing USD selling bias.
• Receding Fed hike bets counter geopolitical risks and continue to undermine the buck.
• China’s disappointing macro data fail to hinder the momentum amid the hawkish RBA.

The AUD/USD pair attracts strong follow-through buying at the start of a new week and surges past the 0.7100 mark, hitting a fresh high since June 5 as sustained US Dollar (USD) selling offsets China's weak macro data dump.

In fact, the National Bureau of Statistics reported that China’s Retail Sales rose 0.6% YoY in July vs. 1.5% expected and 1.0% in the previous month. Adding to this, China's Industrial Production also fell short of consensus estimates, growing 4.5% YoY last month, compared to 5.3% in June. Furthermore, Fixed Asset Investment declined by 6.7% year-to-date (YTD) in July, weaker than a fall of 6.2% anticipated and 5.7% previously. The immediate market reaction, however, turns out to be muted, with a broadly weaker USD acting as a tailwind for the AUD/USD pair.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, slumps to an over two-month low on the back of reduced bets for an immediate interest rate hike by the US Federal Reserve (Fed). The US inflation data released last week painted a picture of moderating price pressures. Moreover, US Retail Sales pointed to a slowdown in consumer spending and fell 0.6% in July, marking the biggest month-on-month fall since May 2025. Adding to this, the University of Michigan's  Consumer Sentiment Index dipped in August to 51 from 55.2 in the previous month.

Meanwhile, the repricing of the Fed's policy expectations offset geopolitical uncertainties, which tend to benefit the safe-haven buck. Even inflation risks stemming from volatile oil prices fail to offer any respite to USD bulls. The Australian Dollar (AUD), on the other hand, draws support from the Reserve Bank of Australia's (RBA) hawkish stance. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the upside and backs the case for an extension of the recent well-established uptrend from the June swing low, near the 0.6845 region.

AUD/USD daily chart

Technical Analysis

The AUD/USD pair holds a constructive bullish bias as it extends its advance above the 100-day Simple Moving Average (SMA) and is now pressing just under the 61.8% Fibonacci retracement at of the latest swing 0.7124. Some follow-through buying would reinforce the broader recovery structure and pave the way for gains to a higher Fibonacci barrier at the 78.6% level near 0.7193 and then the cycle high region at 0.7281. On the downside, immediate support emerges at the 50% retracement at 0.7075, reinforced by the 100-day SMA at 0.7061. A deeper pullback would expose the 38.2% retracement at 0.7026 and then the 23.6% level at 0.6966 ahead of the 200-day SMA at 0.6940 and the swing low area around 0.6869.

(The technical analysis of this story was written with the help of an AI tool. Know more.)