AUD/USD rises as soft USD ahead of CPI drives momentum

The AUD/USD gathered momentum on Monday, trading at the 0.6375 level, with 0.30% gains, and the pair's price dynamics were set by a soft US Dollar, which seems to be consolidating last week’s gains.

After the Federal Reserve’s hawkish rhetoric gained relevance last week, the Greenback recovered, and now investors are awaiting inflation figures from October to continue placing bets on the next Fed decisions. The Consumer Price Index (CPI) from the US, is expected to have declined to 3.3% YoY from the previous 3.7%, while the Core measure is expected to have stagnated at 4.1% YoY. 

It is worth noticing that Fed officials were seen as not satisfied with the progress made on inflation and claimed to need further evidence to declare that the job is done. In that sense, the outcome of the inflation figures may set the pace for the Greenback’s price dynamics for the next sessions as they will model the expectations for the next December meeting of the Fed. Elsewhere, the US government bond yields are rising. The 2-year rate stands at 5.07%, and the 5 and 10-year yields are seen at 4.70% and 4.67%, respectively, which seems to limit the USD's losses. 

AUD/USD levels to watch

The daily chart suggests that the AUD/USD has a neutral to bullish technical bias as the bears step back to consolidate after five consecutive days of losses. The Relative Strength Index (RSI) signals a potential reversal as it exhibits a positive slope below its midline, while the Moving Average Convergence (MACD) presents weaker green bars. 

In the larger context, the pair is above the 20-day Simple Moving Average (SMA), but below the 100 and 200-day SMAs, indicating that the bears are still holding some dominance over the bulls on the broader time horizon. However, the short-term outlook will remain positive if the bulls gather further ground and hold above the 20-day SMA. 

Supports: 0.6373 (20-day SMA), 0.6350, 0.6300
Resistances: 0.6400, 0.6450, 0.6470.

AUD/USD daily chart