• AUD/USD is aiming to reclaim the 0.6700 resistance as the USD Index has retreated.
• The Australian Dollar ignored weaker-than-anticipated Chinese Retail Sales and Industrial Production data.
• RBA policymakers believed that more rate hikes were required due to inflation risks.

The AUD/USD pair has rebounded after a correction to near 0.6680 in the Asian session. The Aussie asset is aiming to recapture the round-level resistance of 0.6700 as the US Dollar Index (DXY) has retreated after a less-confident recovery attempt.

The Australian Dollar ignored weaker-than-anticipated annual Chinese Retail Sales and Industrial Production data (April). However, figures landed better than prior releases, indicating that the economy is walking slowly on the recovery path.  

In early Asia, the Reserve Bank of Australia (RBA) also released which conveyed that the unexpected decision of 25 basis points (bps) interest rate hike was based on inflation risks. RBA policymakers believed that more rate hikes were required due to inflation risks from weak productivity growth, persistently high services inflation, and faster-than-forecast rental increases.

Scrutiny of AUD/USD’s four-hour scale indicates that the upside is capped from April 14 high of around 0.6806 while the downside is restricted from March 07 low around 0.6580. Intermediate support is plotted from May 03 low around 0.6640. The 200-period Exponential Moving Average (EMA) at 0.6700 is indicating a sideways trend.

Meanwhile, the Relative Strength Index (RSI) (14) has rebounded from 40.00, indicating weak downside bias.

An acceptance above the round-level resistance at 0.6800 confidently, Australian Dollar bulls will firmly drive the asset higher toward February 06 low at 0.6855 followed by February 21 high at 0.6920.

In an alternate scenario, US Dollar bulls will flex their muscles if the Aussie asset will drop below March 15 low at 0.6590. An occurrence of the same will expose the asset to March 08 low at 0.6568 followed by 02 November 2022 high around 0.6500.

AUD/USD four-hour chart