Today, the AUD/USD pair is retreating slightly from the new yearly high near 0.6590 reached yesterday and is trading within a narrow range. Nevertheless, the potential for further downside appears limited.

The Australian dollar is under pressure due to weak domestic data, which reinforces expectations of another rate cut by the Reserve Bank of Australia (RBA) in July. According to the Australian Bureau of Statistics (ABS), retail sales rose by only 0.2% month-over-month in May, below the forecast of 0.4% and only slightly above the flat reading in April. In addition, moderate strengthening of the US dollar is putting extra pressure on the AUD/USD pair.

At the same time, a significant recovery in the dollar after hitting a multi-year low on Tuesday still seems unlikely, given growing expectations that the Federal Reserve may resume its rate-cutting cycle in the coming months. While the likelihood of a rate cut in July is considered low, markets are pricing in more than a 75% chance of a cut in September. This could limit downward pressure on the dollar, thereby supporting the AUD/USD pair.

Today, the ADP private sector employment data, due during the North American session, may provide short-term trading opportunities and set the tone for the pair's further movement. Tomorrow, attention will turn to the release of the key US NonFarm Payrolls (NFP) report.

From a technical standpoint, as long as oscillators on the daily chart remain in positive territory, the path of least resistance for the pair continues to be to the upside.