AUD/USD Forecast: Aussie maintains positive tone after rebounding at key level

Matías Salord FXStreet

AUD/USD Current Price: 0.6410

US Dollar stabilizes after days of declines, fails to rally on hotter US PPI.
Attention turns to the US Consumer Price Index on Thursday.
The AUD/USD held above a short-term uptrend line; technical indicators favor some consolidation.

The AUD/USD dropped on Wednesday amid a modest recovery of the US Dollar, particularly after wholesale US inflation data. The Greenback is holding onto recent losses but showing signs of stabilization ahead of crucial US consumer inflation figures.

Reserve Bank of Australia (RBA) Assistant Governor Kent reiterated that the bank is in the third phase of monetary policy tightening, assessing the impact of rate hikes. He warned that more rate hikes may still be needed. However, the market expects the RBA to keep rates unchanged throughout the end of the year. On Thursday, the Melbourne Institute will release the Survey of Consumer Inflationary and Wage Expectations. In September, the expected annual inflation rate dropped from 4.9% to 4.6%.

In the US, the Producer Price Index (PPI) surprised with an increase in the annual rate from 2% to 2.2%, against the expected decline to 1.6%. The core rate also rose unexpectedly from 2.5% to 2.7%. The Greenback rose modestly after the numbers and then lost momentum after the FOMC minutes.

The minutes showed that members agreed at the September meeting that they should "proceed carefully" and acknowledged two-sided risks. The minutes keep the door open to one more rate hike while also indicating that some members consider no more hikes are needed. The release of the Consumer Price Index (CPI) on Thursday will be crucial. The annual rate is expected to slide from 3.7% to 3.6%. A sharp increase would significantly boost expectations of another hike. Jobless Claims data is also due on Thursday. A slowdown in inflation could add conviction to the ongoing correction of the US Dollar and, combined with a risk-on sentiment, could further boost AUD/USD.

AUD/USD short-term technical outlook

The AUD/USD dropped on Wednesday but rose above the 20-day Simple Moving Average (SMA) and above 0.6400 during the American session. The daily chart shows the trend is down, but the pair has returned to a familiar range.

On the 4-hour chart, the price rebounded at an upward trendline and remained above the 20-SMA, preserving the bullish short-term outlook. A consolidation above 0.6435 would clear the way for more gains, targeting the 0.6465 area. Above that, the next objective is 0.6500. Technical indicators on the chart suggest a potential correction in the next few hours before attempting another leg higher. A break below 0.6390 would change the outlook to neutral, favoring an extension of the decline initially towards 0.6375. Below that, the next support area is at 0.6340.

Support levels: 0.6395 0.6375 0.6340

Resistance levels: 0.6435 0.6470 0.6500

View Live Chart for the AUD/USD

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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