AUD/USD Forecast: Australian inflation and Retail Sales may bring back demand

AUD/USD Current Price: 0.6891

• The US Dollar benefited modestly from easing demand for high-yielding assets.
• Australian data could help AUD/USD recover the 0.6900 level in the near term.
• AUD/USD technical readings suggest the intraday decline was a mere correction.

The AUD/USD pair trimmed weekly gains and trades in the 0.6890 price zone, not far from where it closed last Friday. The pair changed course early on Tuesday as Asian stock markets struggled to retain the positive momentum. Demand for high-yielding assets faded further during European trading hours and remained subdued through the American session, partially benefiting the US Dollar.

Meanwhile, US Treasury yields advanced amid mounting speculation the US Federal Reserve is far from pivoting on monetary policy. Fed officials on Monday suggested the terminal rate would be above 5% while adding that rate cuts are off the table for 2023. The 10-year Treasury note currently yields 3.62%, roughly 10 bps up, while the 2-year note offers 4.15%, up 6 bps.

The upcoming session will be engaging in terms of Australian macroeconomic data, as the country will publish the November Monthly Consumer Price Index, foreseen at 7.3% YoY, up from the previous 6.9%. Also, Australia will unveil November Retail Sales, expected to have increased by 0.6% after falling 0.2% in the previous month. Finally, it is worth adding that China will publish the December Consumer Price Index (CPI) and the Producer Price Index (PPI) for the same month.

AUD/USD short-term technical outlook

The AUD/USD pair’s decline seems corrective, with no signs of a bearish extension ahead. In the daily chart, the pair remains above its moving averages, with the 100 and 200 SMAs maintaining their downward slopes but the 20 SMA heading north in between. At the same time, technical indicators have lost their upward strength but develop above their midlines.

In the 4-hour chart, the intraday decline helped AUD/USD correct extreme overbought conditions but is insufficient to confirm further slides ahead. The Relative Strength Index (RSI) indicator has turned flat at around 55, reflecting easing buying interest, while the Momentum indicator maintains its downward slope, although far above its 100 line. Moving averages hint at an upcoming recovery as the 20 SMA heads north almost vertically, providing dynamic support around the daily low while standing far above the longer ones.

Support levels: 0.6870 0.6825 0.6775

Resistance levels: 0.6920 0.6950 0.6990  

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