Australian Dollar holds gains despite lower-than-expected Trade Surplus from Australia

• AUD/USD bulls retain firm amid weak US data.
• May's strong Retail Sales figures from Australia continue to support the pair, soft Trade Surplus may limit the upside.
• US traders are out celebrating Independence day.

The Australian Dollar (AUD) held its ground against the USD, maintaining itself in highs since January. This is despite the weaker-than-expected Trade Surplus figures reported during the Asian session as the USD remains weak following Wednesday’s set of soft economic figures reported.

The Australian economy is showing some signs of weakness. However, persistently high inflation is prompting the Reserve Bank of Australia (RBA) to delay potential rate cuts. As potentially one of the last G10 countries' Central Banks to initiate rate reductions, this could somewhat further extend the gains of the Aussie as markets are also considering rate hikes.

Updated Daily Market Movers: AUD gains strength despite disappointing Trade Surplus data

• Trade Surplus for May in Australia came in at 5,773M MoM, narrower than the 6,678M expected and a downgrade from 6,548M in the previous reading, according to the Australian Bureau of Statistics on Thursday.
• Australia’s Goods/Services Exports rose 2.8% on a monthly basis versus the 2.5% decline in the prior month, offering some support to the Aussie.
• From the Reserve Bank of Australia, this week's minutes reflected an ongoing preference for holding the policy rate steady, primarily due to "uncertainty around consumption data and clear evidence of financial stress among many households".
• With the bank leaving the door open for rate hikes and with Governor Bullock confirming that the bank will do what's necessary to bring down inflation, the Aussie might extend its gains.
• Futures markets now assign a 25% probability of a rate hike at the RBA’s August 6 meeting, growing to around 50% in the following meetings.
• For the Federal Reserve, the market’s anticipation for a rate cut in September remains robust, with a 70% odds placed on the expectation.
• Wednesday’s soft ADP, Jobless Claims, and ISM Services PMIs definitely boosted the market’s doves confidence of a September cut.

Technical Analysis: AUD/USD continues its strong momentum, outlook favorable for the bulls

The AUD/USD pair retains a robust momentum, with indicators including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) residing deep in positive territory. With the pair in its January highs, it shows a promising outlook.

On the resistance front, 0.6730 and 0.6750 are the next bullish targets. Meanwhile, potential support levels include 0.6670, 0.6650, and 0.6630.