AUD/USD Analysis: Potential Impact of US CPI Data on Currency Pair

  • US CPI data for August in line with expectations.
  • Australia to release Consumer Inflation Expectations for September.
  • AUD/USD showing signs of recovery but remains at risk of falling.

The AUD/USD pair has been consolidating near 0.6640, the weekly low, as the US Dollar weakened against the Japanese Yen. However, comments from Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter have limited gains for the Aussie. Hunter’s remarks suggest a hawkish stance from the RBA, with no rate cuts expected in Australia despite strong employment indicators.

Following the release of US CPI data, AUD/USD fell to a fresh September low of 0.6621 as markets turned risk-averse. However, the pair managed to recover above the 0.6650 mark as US indexes bounced back. This Thursday, Australia’s Consumer Inflation Expectations will be released, providing further insight into the economic outlook.

Technical Outlook for AUD/USD

From a technical perspective, AUD/USD remains at risk of falling as it continues to post lower lows and lower highs. The pair is trading below its 20 SMA, indicating bearish control. However, a steady recovery above the 0.6710 level could invalidate the bearish case.

On the 4-hour chart, AUD/USD presents a neutral-to-bearish stance, with the pair struggling to hold above the 200 SMA. Technical indicators suggest a potential downward extension, with the RSI consolidating around 42. Support levels to watch are 0.6620, 0.6590, and 0.6550, while resistance levels are at 0.6675, 0.6710, and 0.6745.

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