Australian dollar weakens as market eyes US CPI inflation data

AUDUSD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.27%	-17.6 Pips
Week to-date	-0.26%	-17 Pips
November	-0.05%	-3.4 Pips

Upcoming key events (London Time)

Wed 01:30 PM USD CPI Inflation Rate (12-mth)

What happened lately

On Monday, the Australian dollar weakened against the US dollar, as indicated by a 0.27% decrease, bringing the AUDUSD exchange rate to 0.65736. In the absence of any major economic news, the performance of the AUDUSD pair seemed relatively subdued. However, market participants are likely keeping a keen eye on upcoming economic indicators that could potentially influence market dynamics.

A significant event scheduled for Wednesday is the release of the US Consumer Price Index (CPI) Inflation Rate, covering a 12-month period at 01:30 PM. This high-impact economic announcement, as indicated by the economicrecap.com, can have profound implications on the currency markets. Inflation data often provides critical insights into the economic health of a country, influencing expectations regarding future monetary policy decisions made by the US Federal Reserve. With its potential effects on interest rate expectations, the CPI data is particularly pertinent for traders and investors engaged in the AUDUSD currency pair.

The anticipation surrounding the US CPI Inflation Rate announcement means that traders may adopt a cautious stance in the lead-up to the event. If the inflation rate data reveals a higher-than-expected increase, this could bolster expectations of more aggressive interest rate hikes by the Federal Reserve, thereby supporting the US dollar and potentially exerting further pressure on the Australian dollar. Conversely, if inflation figures come in lower than anticipated, it may lead to a weakening of rate hike expectations, possibly benefiting the Australian dollar in the short term. Therefore, the upcoming inflation data will be closely scrutinized, with its results likely shaping market sentiment and AUDUSD movements in the subsequent days.

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What can we expect from AUDUSD today?

AUDUSD on Monday dropped -0.27% to 0.65736. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks bearish as the pair posted lower in Monday trading session.

Looking ahead for the day, immediate support level is at S1 0.65577 with break below could see further selling pressure towards S2 at 0.65419. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.65982 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.65621 would indicate selling pressure.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out:

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