AUD/USD hits resistance near 0.6690 after rally inspired by hot Aussie Inflation

The AUD/USD pair surrenders some of its intraday gains after reaching to near 0.6690 in Wednesday’s European session. The Aussie asset struggles to extend the rally inspired by the hotter-than-expected Australian monthly Consumer Price Index (CPI) data for May.

The data showed that price pressures grew at a robust pace of 4.0% from the estimates of 3.8% and the prior release of 3.6%. As per the inflation report, high prices of fuel, food, electricity and rentals were prompted inflationary pressures.

Stubbornly higher Australian inflation data has kept hopes of more rate hikes by the Reserve Bank of Australia (RBA) on table. Currently, the RBA has been maintaining its Official Cash Rate (OCR) at 4.35% from last eight months.

Meanwhile, the US Dollar (USD) rises to near the crucial resistance of 106.00 as the Federal Reserve (Fed) continues to support the maintenance of the current interest rate framework for a longer period. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps to near the crucial resistance of 106.00. On Tuesday, Fed Governor Michelle Bowman said interest rates need to remain high for some time to bring inflation under control.

Contrary to Fed’s remarks on the interest rate outlook, market participants expect that the Fed will cut interest rates twice this year and will start the policy-normalization process from the September meeting.

On the economic front, investors await the United States (US) core Personal Consumption Expenditure Price Index (PCE) data for May, which will be published on Friday.