-
AUD/USD continues to face selling pressure despite a rebound in Australia’s inflation.
-
Major contributors to a rebound in Australian inflation were rising energy prices and house rentals.
-
AUD/USD trades near the lower portion of the Darvas Box pattern, which signifies that chances for a breakdown are high.
The AUD/USD pair faced a sharp sell-off while trying to recover the crucial resistance of 0.6400 on Wednesday. Australian wealth fell despite a rebound in August’s Australian Consumer Price Index (CPI) data.
Australia’s monthly CPI rebounded to 5.2% from July’s 4.9% reading, in line with market participants’ expectations. The main contributors to the return to Australian inflation were rising fuel prices and house rents. An expected rise in inflation has fueled expectations of another interest rate hike from the Reserve Bank of Australia (RBA).
Meanwhile, the US Dollar Index (DXY) continues to capitalize on fears of a global slowdown due to central bankers’ higher interest rates and a hot inflation environment. In addition, Federal Reserve (Fed) policymakers see the central bank not yet acting on interest rates as the US economy remains resilient due to falling inflation and strong consumer spending.
AUD/USD is trading near the bottom of the Dervus box pattern formed on the four-hour scale, indicating that a breakout is more likely. The 200-period exponential moving average (EMA) at 0.6457 continues to act as a key barrier for Australian dollar bulls.
The Relative Strength Index (RSI) (14) moves into the bearish range of 20.00-40.00, indicating that a bearish impulse has been triggered.
A fresh downside would appear if the Aussie asset drops below August 17 low around 0.6360. This would expose the asset to the round-level support of 0.6300 followed by 03 November 2022 low at 0.6272.
In an alternate scenario, a decisive break above August 15 high around 0.6522 will drive the asset to August 9 high at 0.6571. Breach of the latter will drive the asset towards August 10 high at 0.6616.
AUD/USD four-hour chart
AUD/USD
