- Australia’s consumer price index rose in November at an annual rate of 4.3%.
- Soft inflation has strengthened the belief that there will be no need for further interest rate increases.
- Fed funds futures suggest a 64% chance the Fed will ease in March.
Despite signs of easing inflation in Australia, the forecast for AUD/USD is slightly bullish on Wednesday as the currency reacted little to the news. In November, consumer price inflation in Australia hit an almost two-year low, with core inflation slowing sharply.
–Are you interested in learning more about MT5 brokers? Check out our detailed guide-
According to Wednesday’s data, the consumer price index rose by 4.3 percent on an annual basis in November. It decreased from October’s 4.9% and was below the expected 4.4%. Meanwhile, the trimmed mean, a measure of core inflation, fell from 5.3% in October to an annual rate of 4.6% in November.
As a result, the soft outcome strengthened the belief that there will be no need for further interest rate hikes.
On the other hand, in the US, the Fed surprised markets with a more dovish stance in December, forecasting a rate cut of 75 basis points (bps) in 2024. As a result, it raised expectations for easing, with traders initially expecting up to 160 basis points from cuts. However, the market has since changed, with the price down 140 basis points for the year.
Furthermore, Fed funds futures suggest a 64% probability that the Fed will ease in March, up from 80% a week earlier.
Furthermore, traders are closely watching the upcoming US Consumer Price Index report on Thursday to gauge the likelihood of a rate cut in March. Experts expect an increase in total inflation by 0.2% for the month and a growth of 3.2% annually.
AUD/USD key events today
Investors will continue to digest Australian inflation data as no key economic reports are scheduled for today.
AUD/USD Technical Forecast: Price is trading in a triangle shape after a bearish leg
On the technical side, AUD/USD is trading in a triangle after a bearish leg that paused at the key support level of 0.6674. The bias is bearish as the price has remained below the 30-SMA since the bears took control. Furthermore, the RSI respected the key level of 50 as resistance, remaining in bearish territory.
–Are you interested in learning more about Telegram Groups for Forex Signals? Check out our detailed guide-
However, within the triangle, the price has returned to the 30-SMA. With the bears in control, the price is likely to respect this resistance level and break out of the triangle and the 0.6674 support level. The price could then make another bearish leg, falling to the 0.6550 support level.
Do you want to trade Forex now? Invest in eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money
