The Aussie is on the move after disappointing business sentiment data. With risk sentiment falling, more Australian & Chinese data, and the Fed Chair speaking ahead, will the recent fall in AUD/USD still have legs?

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto DAX: 12435.73 -0.86%

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Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

New Zealand FPI at 11:45 pm GMT

Japan PPI at 12:50 am GMT (July 10)

Australia Westpac consumer sentiment at 1:30 am GMT (July 10)

Chinese CPI & PPI at 2:30 am GMT (July 10)

U.K. GDP, trade balance & manufacturing production at 9:30 am GMT (July 10)

Bank of Canada monetary policy statement at 3:00 pm GMT (July 10)

Fed Chair Jerome Powell to testify on semiannual Monetary Policy Report

What to Watch: AUD/USD

As mentioned in the intro, the Australian dollar took a little bit of a spill during the Tuesday trading session after disappointing business sentiment data, suggesting that we shouldn’t expect a big pickup in second quarter growth. That was especially true for today’s watchlist pair, AUD/USD, which after double topping just below 0.7050, has now broken a minor support area between 0.6950 – 0.6970, highlighted in the one hour chart above.

So, the odds are in favor of AUD/USD bears at the moment, and volatility might not stop here as we have a slew of potential catalysts with coming up from Australia (Westpac consumer sentiment), China (CPI & PPI), and the Federal Reserve Chairman Jerome Powell’s testimony to Congress tomorrow. If you are a bear, a retest of the broken minor support area should be on your radar, as well as disappointing Australian and Chinese data combined with a bearish reaction in the pair.

If you’re a bull, breaking above that area of interest in between 0.6950 – 0.6970 is a tall order without very positive Australian and Chinese data, which is a very low probability outcome at the moment. You might also need Powell to signal a 50 bps rate cut at his testimony tomorrow for the Greenback to shift its recent bullish stance. So right now, a long position in AUD/USD is a very low probability bet, and probably shouldn’t be considered until we see a retest of 0.6900 with the above bullish scenarios starting to play out.