AUD/USD drops below the 0.6900 figure as the USD strengthens

• AUD/USD trimmed Tuesday’s gains as USD bulls recovered some ground ahead of Jackson Hole.
• US Durable Good Orders beat estimates, contrarily to US housing data, flashing recession.
• AUD/USD Price Analysis: Range-bound, expecting the outcome of Fed’s Jerome Powell speech.

The AUD/USD remains on the defensive on Wednesday, trimming some of its Tuesday gains, but remains above the 0.6900 figure amidst an upbeat sentiment, putting a lid on the AUD/USD fall. Factors like mixed US economic data released and investors awaiting Jerome Powell’s speech at the Kansas City Fed symposium in Jackson Hole keep traders cautious.

The AUD/USD hit a daily low of around 0.6879, but the release of mixed US economic data weighed on the greenback, so the major, climbed back above the 0.6900 figure, though falling short of its opening price. At the time of writing, the AUD/USD trades at 0.6900, down by 0.37%.

US Durable Good Orders surprisingly rose in July, according to the US Commerce Department, with orders at 0% MoM, while excluding defense and aircraft, rose by 0.4%, higher than estimates at 0.3%.

In the meantime, US Pending Home Sales fell for the sixth consecutive month, collapsed -19.9% YoY, less than -22% drop, while on a month-over-month, dipped -1%, vs. -4% forecasts.

Meanwhile, the US Dollar Index, a gauge of the greenback’s value against a basket of peers, extended its gains by 0.26%, at 108.800, a headwind for AUD/USD prices. US Treasury bond yields are echoing the US dollar direction, led by the 10-year note rate at 3.113%, gaining six and a half bps.

Elsewhere, late on Tuesday, the Minnesota Fed President Neil Kashkari crossed wires. Kashkari said that inflation is very high, and it is the Fed’s job to curb it. He emphasized the need to tighten monetary policy and added that the Fed could only relax on rate increases when they see compelling evidence of inflation heading toward 2%.

An absent Australian economic docket left traders leaning towards US dollar dynamics. Australia’s PMI was soft in tone with worldwide S&P Global PMIs released during the week. But, it would not deter the Reserve Bank of Australia from hiking rates. Money market futures expect at least a 35 bps increase of the Reserve Bank of Australia at their next monetary policy meeting on September 6^th.

AUD/USD Price Analysis: Technical outlook

The AUD/USD daily chart illustrates the major bottoming around the 0.6850-0.6930 area for the last four trading days, while the Relative Strength Index (RSI) crossed below the 50-midline. Nevertheless, the pair might be set for the Jackson Hole outcome. Even though the RSI crossed above its 7-day SMA, it shifted gears to the downside, meaning that AUD/USD sellers could be gathering momentum. Therefore, a break below the bottom of the range will expose the 0.6800 figure, followed y the YTD low at 66.81. On the flip side, an AUD/USD upside break will put in play the 20-day EMA at 0.6973, followed by the 0.7000 figure.