The AUD/USD exchange rate remained flat on Wednesday, reflecting a period of market indecision as traders awaited high-impact macroeconomic data from the United States and a critical ruling from the Supreme Court of the United States (SCOTUS) regarding the legality of US’s tariffs.
The pair was trading around 0.6680, sitting just a few points below its highest level of the year, highlighting the underlying bullish bias that continues to support the Australian dollar. The brokers at PrimeLuno provide a comprehensive breakdown of this topic in this article.
Despite the lack of strong intraday movement, the Australian dollar has shown resilience, supported by technical strength, moderating US inflation, and expectations that US trade policy uncertainty could ease depending on the court’s decision. With key US data releases and Federal Reserve commentary looming, volatility in the AUD/USD pair is expected to rise.
US Retail Sales Data and SCOTUS Decision
The AUD/USD pair has largely paused as traders digested recent US economic data. A labor market report released on Friday showed that the US economy created only 50,000 jobs in December, significantly below the median forecast of 70,000. This data reinforced the view that labor market momentum is cooling, a factor that could influence future Federal Reserve policy decisions.
Meanwhile, US inflation data released on Tuesday offered further encouragement to risk-sensitive currencies like the Australian dollar. The report showed that inflationary pressures continued to fade, suggesting that the impact of the tariffs has so far been relatively muted. The core Consumer Price Index (CPI) slowed from 0.3% in November to 0.2% in December, while the annualized core CPI declined from 2.7% to 2.6%.
This moderation in inflation has strengthened expectations that the Federal Reserve may avoid further aggressive tightening, which typically weighs on the US dollar and supports AUD/USD upside potential.
Key Upcoming US Economic Data to Watch
Producer Price Index (PPI)
The next major inflation indicator on the calendar is the US Producer Price Index (PPI). This report is closely watched because it offers insights into upstream price pressures that could later filter into consumer inflation. Economists expect the core PPI to remain steady at 2.6% year-on-year, reinforcing the narrative of contained inflation.
A softer-than-expected PPI reading would likely pressure the US dollar, potentially allowing AUD/USD bulls to regain momentum.
US Retail Sales Report
Another crucial data release is US retail sales, which provides a snapshot of consumer spending, the backbone of the US economy. Forecasts suggest that retail sales rose by more than 3% year-on-year in December, driven by robust holiday shopping activity.
Stronger retail sales could offer temporary support to the dollar, but if inflation remains subdued, markets may still interpret the data as non-threatening to the Fed’s policy outlook.
Federal Reserve Speakers and Beige Book
In addition to hard data, traders will closely monitor statements from key Federal Reserve officials, including Stephen Miran, Raphael Bostic, and Neel Kashkari. Any hints regarding interest rate timing, inflation risks, or economic resilience could have an immediate impact on USD volatility.
The release of the Federal Reserve’s Beige Book will also be important, as it summarizes regional economic conditions and often shapes market expectations ahead of upcoming FOMC meetings.
AUD/USD Technical Analysis
Chart Structure and Indicators
From a technical perspective, the daily chart paints a constructive picture for the AUD/USD exchange rate. The pair is consolidating around 0.6680, a key resistance-turned-support zone that also marks its highest level since September last year.
Importantly, price action sits near the upper boundary of a cup-and-handle pattern, a classic bullish continuation formation. The pair has also remained firmly above both the 50-day EMA and the 100-day EMA, confirming a medium-term uptrend.
The formation of an ascending channel further reinforces the bullish market structure, while the Supertrend indicator remains green, signaling that trend-following momentum favors buyers.
Outlook and Key Levels
Given the confluence of bullish technical signals, the most likely scenario is continued upside. The next key resistance level to watch is 0.6765, which represents the highest point of the year. A decisive breakout above 0.6765 would likely open the door for a move toward the psychological 0.6800 level.
As long as the pair holds above 0.6600–0.6650 support, the bullish AUD/USD outlook remains intact, especially if US data weakens or the SCOTUS ruling boosts risk appetite.
Conclusion
In summary, the AUD/USD forex signal remains bullish, supported by cooling US inflation, technical strength, and anticipation of a potentially market-friendly SCOTUS ruling.
While short-term volatility is likely around US retail sales, PPI data, and Fed commentary, the broader trend continues to favor AUD/USD bulls, with 0.6765 and 0.6800 emerging as key upside targets in the days ahead.
