After being dominated by USD since the price bounced off from 0.7400 area, AUD managed to regain momentum recently bouncing off the 0.6850 area. The dovish rhetoric expressed by the US Federal Reserve at the policy meeting yesterday is certainly bearish for USD. No wonder, AUD regained momentum immediately.

Recently Australia's housing market weakened more than expected and GDP growth slowed down. So, the recent data clearly indicated cooling down in the domestic economy. The RBA voiced concerns about the labor market and GDP data in their speeches as well. The RBA finally revised the view on the labor market. The unemployment rate is currently assessed at 5.2%. The NAIRU is also going lower than the previously measured 5% where the ultimate target of the unemployment is set at 4.75% by the middle of 2021. The change in the economic assessment signals a rate cut on the agenda. Business conditions and consumer sentiment as well as the labor market data were published and showed how challenging the outlook is. The employment change was seen to be more moderate than previous data but much better than expected. Australia's employemt rose by 42k. However, hours worked contracted 0.3% in the month and the unemployment rate remained at 5.2% because of a further increase in a participation rate. Consumer sentiment came in at -0.6% versus the previous print at 0.6%. The rate cut and tax cut will provide the relief, but it is difficult to foresee the improvement in the housing market.

On the other hand, the economic data from the US weakened from May 2019, thus indicating the rate cut. Traders and investors awaited this change in rhetoric would be confirmed by the FOMC. The Fed recently stated at the policy meeting that it was ready to deal with growing global and domestic economic risks though rate cuts beginning as early as next month. The main factors which assured the Fed to consider a rate cut are rising trade tensions and growing concerns about weak inflation. Even as the U. central bank left its benchmark interest rate unchanged, investors grasped the change in rhetoric. The US President has repeatedly accused Powell's Fed of undermining his administration's efforts to boost economic growth and insisted on a rate cut.

Fresh economic projections released by the Fed show that nearly half of 17 policymakers now are willing to lower borrowing costs over the next six months, and seven see rates likely to warrant being lowered by a full half a percentage point - almost what bond investors have anticipated. Today US Philly Fed Manufacturing Index report is going to be published which is expected to decrease to 10.6 from the previous figure of 16.6. and Current Account is likely to widen to -125B from the previous figure of -134B. Moreover, the Unemployment Claims are expected to have positive outcome of a decrease to 220k from the previous figure of 222k.

To sum it up, despite the weak economy and slower growth, Australia's economy has been gaining momentum. So, AUD is able to assertstrength over USD. As a rate cut by the US Fed is seen quite imminent, USD is set to extend weakness. in the coming days.

Now let us look at the technical view. The price is currently quite impulsive with the bullish momentum which pushed it above 0.6900 area. However, the price is being held by the dynamic level of 20 EMA as resistance. Though the price has formed Bullish Divergence recently, the bearish trend in place is said to be stronger than the bulls to confirm a definite counter-move under the current price formation. As the price remains below 0.70 area with a daily close, the bearish bias is expected to continue.