AUD/USD has been quite impulsive and non-volatile under the bullish momentum recently which made the price trade above 0.70 with an intention to retest 0.7050 again in the volatile corrective range.

The Reserve Bank of Australia lowered rates by 0.25 in June and July. The moves were intended to ease monetary conditions and boost flagging growth. Besides, the RBA board aimed was to bring down the value of the Australian dollar which was too firm. Economists currently forecast Australia's $1.9 trillion annual gross domestic product (GDP) would expand 2.1% in 2019, down from predictions of 2.7% and 2.2% in the previous forecasts. Economic growth is seen picking up modestly to 2.5% in 2020 and 2.6% in 2021, though that would still be short of the 2.75% that is considered trend. A run of lackluster quarters has already seen annual growth slow to its lowest in a decade at just 1.8% as falling house prices and sluggish wages affected consumer spending. Such impacts have already steadied home prices in the long-suffering housing markets of Sydney and Melbourne.

Tomorrow, the RBA is due to release the minutes of the latest policy meeting that is expected to play a vital role in the upcoming AUD gains. However, market expectations on this big event can increase volatility for AUD/USD. On Thursday, Australian Employment Change report is going to be published which is expected to have a drastic fall to 9.1k from the previous figure of 42.3k and Unemployment Rate is expected to be unchanged at 5.2%.

On the other hand, the Federal Reserve has been under pressure from the US government. Some Fed officials believe that lower interest rates would lead to achieving the inflation goal. Investors are betting that Fed officials will announce a reduction in the benchmark overnight interest rate on July 30-31. Fed Chairman Jerome Powell recently suggested to lawmakers in his congressional testimony that the central bank has room to ease policy because inflation pressures remain muted despite a low unemployment rate. US President Donald Trump has repeatedly criticized the hawkish Fed's rhetoric and called for rate cuts to unwind earlier tightening. The White House's escalating conflicts with China and other major trade partners have also raised concerns about global growth. Additionally, quarterly projections published after the FOMC's June meeting revealed that the committee's median estimate of the neutral interest rate had fallen to 2.5% from 2.75% that indicates strong likelihood of the rate cut.

The US will present a retail sales report tomorrow which are expected to decrease to 0.1% from the previous value of 0.5%. In this context, USD is expected to struggle further to sustain momentum against AUD which could trigger correction below 0.7050. A strong breakout above 0.7050 could lead the price to come with definite momentum in the nearest days.

To sum it up, USD is likely to struggle versus AUD as the expectations of the upcoming economic reports and a rate cut have already impacted the overall market sentiment and could reinforce USD weakness in the coming days.

TECHNICAL OVERVIEW:

The price has been quite impulsive with the bullish gains since it bounced off the 0.6920 support area with a daily close. Despite the preceding strong bearish trend in place, such bullish pressure above 0.70 indicates strength of the bulls at the current price formation. In MACD, bearish divergence is in progress which if confirmed would create bearish pressure off 0.7050. Otherwise, a break above 0.7050 with a daily close would lead the price higher towards 0.7200 area in the coming days.