AUD/USD Technical Setup Shows Warning Signs Amid Mixed Economic Data

The AUD/USD pair currently sits near 0.6738, hovering close to 15-month highs, but technical indicators are flashing caution signals that traders should heed. The Relative Strength Index (RSI) is approaching overbought levels around 69, suggesting a pullback could materialize in the near term despite the currency pair’s overall bullish momentum.

Economic Data Supports Strength But Remains Cautious

Australia’s inflationary pressures showed some moderation in November, though the momentum remains stubbornly above the Reserve Bank of Australia’s (RBA) 2-3% comfort zone. The monthly CPI came in flat, mirroring October’s reading, while annual CPI decelerated to 3.4% from 3.8%. More importantly for policy makers, the trimmed mean CPI—the RBA’s preferred inflation gauge—climbed 0.3% month-on-month (down from 0.4%) and cooled to 3.2% annually from 3.3%.

On the US side, employment data painted a mixed picture. Private payrolls added just 41K jobs in December, disappointing against the 47K forecast, though this marked an improvement from the previous month’s 32K decline. The ISM Services PMI delivered a positive surprise, accelerating to 54.4 from 52.6 and outpacing analyst expectations of 52.3. However, job openings fell more sharply than anticipated, dropping to 7.146 million in November from 7.449 million, well below the 7.6 million estimate.

Technical Structure Points Higher, But Support Levels Matter

Despite RSI proximity to overbought territory, the broader technical framework remains constructively bullish. The AUD/USD pair decisively penetrated the previous trendline resistance around 0.6550 and maintains a solid position above both the 50-day and 100-day Simple Moving Averages (SMAs). The Average Directional Index (ADX) reading near 35.36 reinforces the strength of the current uptrend.

Should a pullback unfold, traders should watch the 0.6660 level as the first line of defense. A breakdown below this area would undermine the bullish setup and potentially expose the 0.6590-0.6570 zone, where the 50-day and 100-day SMAs converge to form a critical support cluster.

Path Forward: Targets and Risks

If the uptrend persists, the psychological 0.6800 barrier comes into view, with possibilities for further extension toward the 2024 highs above 0.6900. However, traders managing long positions should acknowledge the near-term overbought conditions and position risk management accordingly, particularly around resistance levels before the anticipated pullback tests lower support zones.