Australian Dollar firms as US Dollar softens

• AUD/USD trades higher despite stronger-than-expected US jobless claims.
• US Initial Jobless Claims fell to 215K, but the Greenback failed to gain traction.
• China remains a key driver for the Aussie, with the former's PPI inflation rising 4.1% YoY, while its CPI slowed to 1.0%.

AUD/USD trades higher near the 0.6940 area on Thursday, as the Australian Dollar (AUD) benefits from a softer US Dollar (USD), even after stronger-than-expected United States (US) jobless claims data showed that the labor market remains stable.

US Initial Jobless Claims fell to 215K, below expectations of 218K and the previous 217K, suggesting that layoffs remain limited. However, the Greenback failed to gain strong traction as the broader US Dollar Index (DXY) slipped for a second straight session, while markets continued to assess geopolitical risks and the Federal Reserve’s (Fed) policy outlook.

China also remains a key driver for the Aussie, given Australia’s strong trade exposure. China’s Producer Price Index (CPI) report, released late Wednesday, showed a 4.1% YoY rise in June, the fastest pace in four years, while China's Consumer Price Index (CPI) slowed to 1% YoY, highlighting stronger factory-gate inflation but still-soft domestic demand. This mixed backdrop may limit the Aussie’s upside even as AUD/USD benefits from USD weakness.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6939, hovering around the 100-period Simple Moving Average (SMA), which acts as a pivot after the latest consolidation. The pair holds above the 20-period SMA at 0.6937, offering nearby dynamic support, while a horizontal band of resistance between 0.6940 and 0.6946 caps the topside. The Relative Strength Index (RSI) at 5 sits in neutral territory, hintng at balanced momen and reinforcing a range-bound near-term bias.

On the topside, immediate resistance is seen at 0.6940, followed by clustered barriers at 0.6944 and 0.6946, where repeated rejection could keep the pair confined to a tight range. On the downside, support is located first at the 20-period SMA at 0.6937, ahead of the horizontal floor at 0.6932. A sustained break below this area would open the door to a deeper pullback despite the current neutral momentum backdrop.

(The technical analysis of this story was written with the help of an AI tool. Know more.)