The AUD/USD pair is showing resilience as it defends the 100-day Simple Moving Average (SMA) support, attracting buyers near the 0.6645 region. With spot prices maintaining a bid tone near 0.6660-0.6665, a three-day losing streak has been halted, signaling a potential uptick.
The US Dollar (USD) is struggling to maintain gains due to dovish Federal Reserve (Fed) expectations, while a positive tone in European equity markets is benefiting the risk-sensitive Australian Dollar (AUD). This dynamic is supporting the AUD/USD pair, although the uptick lacks strong bullish conviction.
Investors are eagerly awaiting the release of the latest US consumer inflation figures to gauge the Fed’s rate-cut path. This data will play a crucial role in shaping USD price dynamics and providing direction for the AUD/USD pair. A weaker inflation outlook could lead to a larger rate cut by the Fed in September, further weakening the USD.
The overall fundamental backdrop supports a potential near-term appreciation for the AUD/USD pair, especially with the Reserve Bank of Australia (RBA) maintaining a hawkish stance. However, caution is advised for aggressive bullish bets until there is strong follow-through buying to confirm the correction from the multi-month peak has ended.
Economic Indicator: Consumer Price Index (YoY)
The Consumer Price Index (CPI) measures inflationary or deflationary tendencies by tracking the prices of a basket of goods and services. The CPI data, released monthly by the US Department of Labor Statistics, compares current prices to those from a year earlier. A high reading is typically bullish for the USD, while a low reading is bearish.
For more details on the CPI and its impact, read more here.
Overall, the AUD/USD pair’s current movements reflect a complex interplay of factors including USD weakness, global market dynamics, and upcoming economic data releases. Understanding these dynamics can help investors make informed decisions about their portfolios and financial strategies.