Australian Dollar continues to struggle ahead of key Australian data

• Aussie kicks off the week on soft note ahead of key data.
• Retail Sales and Inflation figures will guide market expectations.
• Economic concerns over China limit the Aussie’s upside.

The AUD saw a further decline against the USD on Monday as AUD/USD fell to 0.6545. Despite the expectations of a future rate hike by the Reserve Bank of Australia (RBA), issues with the local economy and Chinese economic woes persist, preventing any significant upward movement.

As the Australian economy shows signs of weakness, the persistent high inflation has prompted the Reserve Bank of Australia (RBA) to delay rate cuts. As per the current forecasts, the RBA stands to be among the last G10 nations to introduce a rate cut, potentially extending the gains of the AUD, but the economic concerns also push the currency down.

Daily digest market movers: Aussie looks weak ahead of Inflation and Retail Sales data

• The risk-off sentiment continues to dominate with Australia's economic climate being influenced by concerns over Chinese economic stress.
• This week, investors will be eyeing Australian June Q2 CPI data, due to be released on Wednesday.
• For Q2, the headline CPI is expected to match Q1's rise of 1.0% QoQ and accelerate to 3.8% YoY from 3.6% in Q1. Meanwhile, the June headline CPI is anticipated to fall to 3.8% YoY.
• With the inflation rate still above the 2-3% target range, the RBA is unlikely to rush toward a policy change. The swaps market predicts stability for the rest of the year with the first significant 25 bps cut expected next summer.
• Tuesday will also see Q2's Retail sales data release. Retail Sales volume is expected to show a less severe decline of 0.2% QoQ in Q2, compared to 0.4% in Q1.

AUD/USD Technical analysis: Bearish outlook underpins, the pair lies below major SMAs

The AUD/USD's movement below the 20,100 and 200-day Simple Moving Averages (SMAs) signals concern, indicating a probable persistence of the downward trend. In July, the pair recorded an extensive nine-day losing streak and fell nearly 3.50%.

Indicator signals are deeply entrenched in the negative, but the oversold scenario may stimulate a correction. However, the bulls' momentum remains weak, and technicals suggest a sideways trade period rather than an upsurge, barring any fundamental catalysts.

Key support levels line up at 0.6530 and 0.6500, while resistance levels lie at 0.6600 (200-day SMA), 0.6610 and 0.6630.