- Markets are bracing for upcoming US consumer inflation data.
- Markets estimate a 69% chance of a December Fed rate cut.
- Data from Australia showed strong consumer and business sentiment.
AUD/USD price analysis shows pause as indecision reigns ahead of US consumer inflation data. Meanwhile, the Aussie reversed its recent slide after economic data from Australia on Tuesday showed strong consumer and business sentiment.
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Markets are bracing for upcoming US consumer inflation data, which could show inflation rising from 2.4% to 2.6%. Meanwhile, monthly price pressures could increase by 0.2%. This report will play a significant role in shaping the outlook for a Fed rate cut. Currently, markets estimate a 69% chance that the US central bank will cut in December. This probability is likely to change after the report.
If inflation beats estimates, it could raise fears of renewed price pressures that would increase caution among policymakers. The US economy has already performed much better than expected, leading some to believe the Fed will take a break in December.
On the other hand, there is a chance that inflation will miss forecasts. In this case, rate cut expectations will rise, and the dollar could fall from recent peaks.
Since Tuesday of last week, the dollar has been in solid growth due to Trump’s election victory. As a result, the Australian dollar collapsed. However, the decline is less than in other major currencies. Trump’s victory also increased risk appetite, keeping the Australian dollar strong.
Meanwhile, data from Australia on Tuesday revealed that consumer sentiment rose in November. A separate report showed that business sentiment was also strong in October. Recent upbeat numbers have thrown off bets on the first RBA rate cut by May next year.
AUD/USD key events today
- Core CPI m/m
- CPI m/m
- CPI y/y
AUD/USD Price Technical Analysis: Price is breaking the uptrend channel
From the technical side, AUD/USD the price has broken its bullish trend pattern, indicating a change in bearish sentiment. In the beginning, the price was higher and the lowest. However, he failed to sustain this move as the bears broke below the support trend line.
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Moreover, the price broke the key support level of 0.6550 to trade well below the 30-SMA. At the same time, the RSI fell deeper into bearish territory. Given the new bearish momentum, AUD/USD could soon reach the key 0.6500 level.
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