AUD/USD Price Forecast: Struggles to extend rally above 0.7100

The Australian Dollar (AUD) slipped 0.17% to around 0.7050 against the US Dollar (USD) during early European trading on Thursday. The decline follows a correction from the previous day, as markets remain skeptical of the Reserve Bank of Australia's (RBA) assertive stance. On Tuesday, the RBA kept its key interest rate at 4.35%, as anticipated, and indicated readiness to raise rates further due to elevated inflation risks.

Notably, Governor Bullock emphasized uncertainty around the RBA's forecasts during a press conference and did not rule out additional rate hikes if inflation pressures persist. Despite this hawkish nuance, analysts at Standard Chartered maintain that "our base case remains no more RBA rate hikes in the foreseeable future." They caution, however, that "the risk to our view is skewed towards a hike in Q4 if demand does not slow sufficiently or if energy prices revisit recent highs."

Meanwhile, a strong US Dollar, even as traders adjust expectations for Fed rate hikes, is also pressuring the Aussie pair. The AUD/USD pair is trading within an upward parallel channel, holding above the 20-day exponential moving average (EMA) at 0.7024, indicating underlying demand. Support is currently found at the 20-day EMA at 0.7024, with a potential break above the channel resistance at 0.7077 paving the way for further gains.