The AUD/USD pair continues to trade within a narrow range, showing only a slight recovery, as ongoing strength in the U.S. dollar constrains upside potential. Key technical levels outline possible price movements; however, fading rallies remains the preferred strategy given the lack of momentum and persistent macro uncertainty. AUD/USD showed a modest rebound during Thursday’s trading session, a noteworthy development considering the firm performance of the U.S. dollar, even after year-on-year CPI printed at 2.7 versus expectations of 3.1. This suggests lingering caution in markets, and there appear to be enough dollar bulls to keep AUD/USD locked in a range.
AUD/USD has respected this range for a prolonged period, and there is little to suggest a meaningful change in behavior. A key level to monitor is 0.67, which remains a clearly defined ceiling for AUD/USD. A sustained break above this level could open the door to a broader upside move, potentially extending a few hundred pips. Despite that possibility, current price action in AUD/USD lacks the momentum needed to justify bullish conviction, reinforcing a preference for selling into strength rather than chasing rallies.
Broader macro considerations also weigh on the outlook for AUD/USD. The Australian dollar often acts as a proxy for U.S.–China trade relations, making AUD/USD sensitive to developments between the two economies. While commodity markets have shown notable strength, providing some support to the Aussie, this appears to be the sole meaningful driver behind recent upward attempts in AUD/USD. Without broader confirmation from global growth or risk sentiment, that support alone seems insufficient to trigger a sustained breakout.
A contrarian stance toward fatigued rallies in AUD/USD remains appropriate, with downside targets initially focused on the 0.6550 area, followed by the 200-day EMA. If AUD/USD were to slip below 0.64, the risk of a sharper downside move would increase materially, as the U.S. dollar could overwhelm most major counterparts in that scenario. Overall, the bias continues to favor the dollar, with no expectation of a major regime shift, as AUD/USD appears stuck in a prolonged phase of consolidation and indecision.