Australian Dollar stumbles near recent highs

The Australian Dollar (AUD) experienced a slight decline on Thursday, trading in a range near 0.7050, a few pips below the multi-week high achieved on Wednesday near 0.7091. This modest movement occurred after US data indicated a slowdown in price pressure, which held the US Dollar (USD) relatively stable. The US Producer Price Index (PPI) showed a flat July reading, lower than expected, while the annual pace and core measures also softened.

These figures dampened expectations of additional Federal Reserve (Fed) rate hikes, contributing to the broader Dollar downtrend. Meanwhile, news that weekly Initial Jobless Claims were higher than anticipated added to the subdued market sentiment. Beth Hammack, President of the Cleveland Fed, reiterated her belief that the Fed needs to exercise more caution in monetary policy to curb inflation, suggesting that current policy measures are not overly restrictive.

On the 4-hour chart, AUD/USD was observed trading at 0.7055, bounded by the immediate resistance level of the 20-period Simple Moving Average (SMA) at 0.7059 and a cluster of nearby support levels. The broader 4-hour trend remained cautiously optimistic, as the pair was trading above the 100-period SMA at 0.7019. Horizontal support at 0.7053 and 0.7046 provided potential downside limits.

Technical indicators indicated a consolidative momentum with the RSI near 50, rather than a clear directional bias. Support on the upside was anticipated at the horizontal level of 0.7058, followed by the 20-period SMA at 0.7059, with a stronger resistance lying at 0.7067. Conversely, support was found at 0.7053, 0.7046, and more robustly at the 100-period SMA at 0.7019, if the AUD continued its downward trajectory.