FX.co ★ AUD/USD

Technical and Fundamental Analysis of the AUD/USD Pair AUD/USD recovered from early losses on Friday, trimming its intraday decline after a mixed batch of U.S. economic data produced an uneven reaction in financial markets. The Australian dollar initially weakened but later stabilized as investors assessed stronger housing figures alongside softer manufacturing data. While positive consumer sentiment helped support the U.S. dollar, weaker industrial activity limited broader USD gains, allowing AUD/USD to regain ground. Fresh data from the United States showed housing starts climbed to an annualized pace of 1.43 million in June, comfortably beating market expectations of 1.31 million and improving from the previous reading of 1.20 million. The stronger housing figures pointed to continued resilience in residential construction despite elevated borrowing costs. However, the picture was less encouraging in other areas of the economy. Building permits, which often serve as a leading indicator of future construction activity, declined to 1.37 million from 1.41 million, missing forecasts of 1.40 million. On a monthly basis, permits dropped 3.0%, suggesting developers remain cautious about the outlook. Manufacturing activity also showed signs of slowing. U.S. industrial production increased by only 0.1% in June, falling short of the expected 0.2% gain while matching the previous month's reading. The softer production data reinforced concerns that higher interest rates continue to weigh on parts of the industrial sector. Consumer confidence, meanwhile, provided a brighter signal. The University of Michigan's preliminary Consumer Sentiment Index rose sharply to 54.4 in July from 49.5 previously, well above market expectations of 51.0. The survey's Consumer Expectations Index also improved to 54.0 from 50.7, indicating households remain relatively optimistic despite persistent inflation pressures. Comments from Federal Reserve officials also remained in focus. Cleveland Fed President Beth Hammack reiterated that inflation is still running above the central bank's target and warned that businesses continue to face cost pressures from higher energy prices, insurance expenses, supply chain disruptions, and expanding investment in artificial intelligence infrastructure. Her remarks reinforced expectations that the Fed will remain cautious before considering any policy easing. AUD/USD is closed around 0.6980, with price action entering an important technical area as buyers and sellers battle for short-term control. The broader trend remains constructive, although momentum has slowed as the pair approaches a significant resistance zone. On the H4 timeframe, a key supply zone is located between 0.6970 and 0.7020, where previous rallies have repeatedly stalled. This region has attracted consistent selling pressure, making it an important barrier that bulls need to overcome before extending the recovery. Meanwhile, the primary demand zone sits around 0.6900–0.6920, where buyers have consistently stepped in during recent pullbacks. This support area also aligns with previous swing lows, reinforcing its technical importance. The moving averages continue to offer valuable trend confirmation. The 20-period SMA remains close to current prices, reflecting short-term momentum, while the 50-period SMA is positioned below and continues to provide dynamic support. As long as the price remains above both moving averages, the overall structure favors buyers, although a decisive move below them could signal a deeper corrective phase. On the H1 chart, shorter-term price action highlights immediate support between 0.6940 and 0.6960, where recent buying activity has repeatedly limited downside moves. This intraday demand area could provide another opportunity for buyers if the pair experiences a pullback. Immediate resistance remains between 0.6980 and 0.7020, where several recent rejection candles suggest sellers continue to defend higher levels aggressively. The 20 SMA on the hourly chart is moving closely alongside current price action, acting as short-term dynamic support, while the 50 SMA sits slightly lower and reinforces the broader bullish structure. A sustained move above both moving averages would strengthen bullish momentum and improve the chances of testing higher resistance levels. Looking ahead, traders should closely monitor the 0.6980–0.7020 resistance area. A confirmed breakout above this zone could pave the way toward 0.7050 and potentially higher levels if buying momentum accelerates. On the downside, failure to maintain support above 0.6940 may trigger another decline toward the stronger 0.6900–0.6920 demand zone.