Current price AUD/USD: 0.6292
- Australian consumer inflation expectations held steady at 54% in October.
- The strong reversal on Wall Street has scared the bears off AUD/USD for the time being.
- AUD/USD pared initial losses, but further gains are still uncertain.
AUD/USD fell to 0.6169, its lowest since April 2020, to end the day around the 0.6300 level. The US Dollar jumped ahead of the US open and after the Consumer Price Index was released as inflation was higher than expected but lower than the previous monthly reading. The annual CPI rose 8.2% in the twelve months to September and rose 0.4% in the month.
Financial markets went into panic mode with the headline, as inflation looks far from the central bank’s 2% target while still holding at record highs despite the efforts of the US Federal Reserve. The USD rose sharply as stocks plunged, although Wall Street was able to stem the bleeding and reverse course, helping the pair rebound.
Meanwhile, Australian consumer inflation expectations unexpectedly held steady at 5.4% in October, from an expected rise to 5.8%. In the upcoming Asian session, China will release September inflation figures, with September CPI expected at 2.8% YoY. The country will also release the trade balance for September, which is expected to show a surplus of $81 billion. Later in the day, the United States will release retail sales figures, which the market can take as a reading of the country’s health.
AUD/USD Short Term Technical Outlook
The daily chart for the AUD/USD pair shows that it managed to hold onto modest gains on Thursday while breaking above Wednesday’s high, supporting an upward extension. At the same time, the pair remains well below the bearish moving averages, while the technical indicators are barely advancing into negative levels. The pair needs to extend its current rally beyond the 0.6500 price area to confirm a tentative low.
The pair is still neutral in the short term, according to the 4-hour chart. It is currently developing a handful of pips above a flat 20 SMA but still below the firmly bearish longs. Meanwhile, the technical indicators reached their midlines but flattened around them, failing to anticipate another move north. The pair could resume its decline if it slips below 0.6270, a strong static support level.
Support Levels 0.6270 0.6230 0.6190
Resistance levels: 0.6340 0.6380 0.6420
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