AUD/USD Forecast: More consolidation likely ahead of US CPI

Matías Salord FXStreet

AUD/USD Current Price: 0.6534

Markets remain quiet ahead of US CPI data.
The US Dollar posts mixed results, keeping AUD/USD around 0.6550.
Risks remain tilted to the downside for the pair, with no clear signs ahead of the Asian session.

The AUD/USD pair traded within the prior day's range on Wednesday as market participants await key US economic data. The pair continues to trade near 0.6550, with risks tilted to the downside.

The deflationary numbers from China did not surprise the currency markets, as an even softer reading was expected. This limited the impact on the Australian Dollar. The data indicates that the economic momentum in China is facing significant challenges while also fueling expectations of stimulus measures.

Commodity currencies remain under pressure amid cautious markets and a slightly firmer US Dollar. As economic data from the US points to a resilient economy, keeping the door open to more rate hikes from the Federal Reserve (Fed), the US Dollar is benefiting. The key report of the week, to be released on Thursday, will be the July Consumer Price Index (CPI). A higher-than-expected number could trigger expectations of another rate hike from the Fed and potentially push the AUD/USD pair lower. Conversely, a soft number could boost the pair's upward momentum and risk appetite.

In Australia on Thursday, the Melbourne Institute will release the Survey of Consumer Inflationary and Wage Expectations. No further data is scheduled from Australia until Tuesday, with the Wage Price Index for the second quarter and the minutes from the Reserve Bank of Australia (RBA).

AUD/USD short-term technical outlook

The AUD/USD pair remained above 0.6500 on Wednesday and climbed to 0.6571 before retracing below the 0.6550 zone. The pair traded within a narrow range without a clear direction, attempting to stabilize following Tuesday's decline. The daily chart indicates a downward bias, but losses appear limited as long as the pair remains above 0.6500. Conversely, a daily close above 0.6600 would suggest a stronger recovery.

On the 4-hour chart, risks are tilted to the downside as the pair is trading below the 20-Simple Moving Average (SMA) and a downtrend line. Indicators provide a mixed perspective: the Relative Strength Index (RSI) is moving north towards 50, while Momentum is turning south from midlines. The lack of clear signals suggests that the ongoing consolidation could continue during the Asian session, with the pair hovering near 0.6550.

A break above 0.6570 would likely propel the AUD/USD pair towards 0.6600. On the flip side, if the pair falls below 0.6520, it would likely lead to a test of 0.6500. Below that level, the 2023 low at 0.6460 would be exposed.

Support levels: 0.6520 0.6490 0.6460

Resistance levels: 0.6555 0.6585 0.6625

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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