AUD/USD Current Price: 0.7083
- US receding inflation sent investors into high-yielding assets on Wednesday.
- The Chinese Price Index rose by less than anticipated in July.
- AUD/USD tested 0.7100 on risk appetite and could keep rallying in the near term.
The AUD/USD pair hit a 2-month high of 0.7108, underpinned by soaring equities and the broad greenback’s weakness. The American dollar edged sharply lower as investors turned into high-yielding assets following the release of the US Consumer Price Index, which contracted by more than anticipated in July. Skyrocketing inflation and slowing economic growth have been the main market drivers, and central bankers have been juggling with taming inflation without restricting progress further.
It is worth noting that the Chinese Consumer Price Index rose less than anticipated in July, up by 2.7% YoY from 2.5% in the previous month but below the 2.9% expected. The Producer Price Index rose by 4.2% in the same period, well below the previous 6.1% and the expected 8%. Australia will release August Consumer Inflation Expectations on Thursday, previously at 6.3%.
AUD/USD short-term technical outlook
The AUD/USD pair trades comfortably above the 61.8% retracement of its June/July decline at 0.7050, now the immediate support level. The pair are battling to overcome a bearish 100 SMA in the daily chart, but the 20 SMA turned firmly higher well below the current level. At the same time, technical indicators turned north within positive levels, supporting another leg higher should the pair clear the mentioned intraday high.
In the near term, and according to the 4-hour chart, the pair is trading over 100 pips above its closest moving average, the 20 SMA, which advances above the longer ones. Technical indicators, in the meantime, have lost their bullish momentum, currently retreating from extreme overbought readings. Still, the risk remains skewed to the upside, with room for an approach to the 0.7200 price zone.
Support levels: 0.7050, 0.7010 0.6970
Resistance levels: 0.7105 0.7140 0.7190
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