AUD/USD Current Price: 0.6308
- The US Dollar jumps after the release of US consumer inflation data.
- Risk aversion adds to the negative sentiment around AUD/USD.
- The pair is approaching 0.6300 and appears vulnerable, with the October low in sight.
The AUD/USD tumbled, experiencing its worst day in weeks, due to a stronger US Dollar following US data. The pair is back near October lows and under pressure again after a seven-day corrective upside move.
The Melbourne Institute's Australian survey showed that one-year inflation expectations rose to 4.8% in October from 4.6% in September. No data will be released from Australia on Friday; however, Chinese inflation and trade data will be closely watched.
The deterioration in risk sentiment during the American session weighed on the Australian Dollar. The decline in commodity prices added further pressure, leading to more losses in AUD/USD.
The initial trigger for the decline was the US inflation report. The Consumer Price Index (CPI) remained steady at 3.7%, slightly above the expected 3.6%. Despite the minor difference, the report and the surprise in the Producer Price Index released on Wednesday had a more significant impact. Additionally, Jobless Claims data showed a still-tight labor market.
The outlook does not point to another rate hike from the Federal Reserve (Fed) but suggests a scenario where rates remain higher for an extended period compared to previous expectations. This boosted the US Dollar and led to a decline in Treasury bonds. On Friday, the University of Michigan Consumer Sentiment survey is due.
AUD/USD short-term technical outlook
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The AUD/USD broke an upward trendline, abruptly ending the correction from monthly lows. Within a few hours, the pair erased days of gains, losing over a hundred pips. The sharp decline is still ongoing, with the pair currently seeking support.
The immediate support zone is around 0.6300. Below that level, the focus will shift to the year-to-date low at 0.6285. Further losses could target 0.6255.
On the 4-hour chart the Relative Strength Index (RSI) in oversold territory but showing no signs of a turnaround, while the Moving Average Convergence Divergence (MACD) has decisively turned bearish. A rebound could face resistance at 0.6345. The Aussie needs to consolidate above 0.6355 to alleviate the pressure.
Support levels: 0.6300 0.6280 0.6255
Resistance levels: 0.6340 0.6355 0.6390
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