• Buoyant US Dollar was the main reason for the AUD/USD’s fall.
  • US inflation continues to cool down, while consumer sentiment deteriorated in March.
  • TDS Analyst expects the RBA would keep rates on hold, on April’s meeting.
  • AUD/USD Price Analysis: Subdued in the near term, awaiting for the RBA’s decision.

The Australian Dollar (AUD) retraces after hitting a weekly high of 0.6738, spurred on the American Dollar (USD) recovery as it got bolstered by weekly, monthly, and quarter-end flows. Wall Street is set to finish the week with gains, while US inflation data could cement the case for a pause in the Fed’s tightening cycle. The AUD/USD is trading at 0.6684, below its opening price by 0.43%.

AUD/USD dwindles below 0.6700 on a buoyant US Dollar

The Fed's preferred inflation gauge, the core PCE published by the US Department of Commerce, increased 4.6% YoY, lower than forecasts and beneath the previous month. Headline inflation was 5%, signaling that the Fed's tightening measures are still curbing inflation.

Susan Collins, President of the Federal Reserve Bank of Boston, expressed approval for the news but emphasized that the Fed still has work to accomplish.

The University of Michigan's (UoM) Consumer Sentiment on its final March reading was 62, worse than expected. At the same time, inflation expectations dropped. For the one-year horizon, American consumers forecast inflation at 3.6%, while for the 5-year horizon, inflation estimations dipped to 2.9%.

Of late, the New York Fed President John Williams said that an uncertain economic outlook and economic data would drive monetary policy. Williams expect inflation to drop to 3.5%, and the Gross Domestic Prodcut (GDP) to contract slightly before rebounding in 2024.

On inflation data, the AUD/USD reacted upwards to 0.6718 before reversing its course, fell sharply below the 0.6700 figure, and printed a daily low of 0.6670. Since then, the AUD/USD stabilized at around 0.6686.

On the Australian front, inflation data would give cues regarding the Reserve Bank of Australia’s (RBA) forward path. The TD Securities Inflation for February was 6.3% YoY, and any readings below the latter can discourage the RBA from continuing to tighten monetary conditions.

TDS expects an RBA’s pause on its tightening campaign

TD Securities Analysts in a note, “The Apr meeting is a close one, with analysts mixed about the RBA decision and markets pricing in no hike from the RBA. We now expect the Bank to pause at the April meeting given the lower Jan-Feb CPI prints and uncertainty over the outlook from the banking turmoil in the near-term.”

AUD/USD Technical analysis

AUD/USD Daily chart

The AUD/USD is trading sideways, as shown by its daily chart, though tilted to the downside. For a bearish continuation, sellers need to reclaim the March 24 swing low at 0.6625, exposing the YTD lows at 0.6564. Once cleared, and the path towards November 10 at 0.6386 is on the cards. On the flip side, if buyers crack 0.6700, that could keep them hopeful that the AUD/USD could test 0.6800 in the near term.

What to watch?

US-Australia economic calendar

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays below 1.0700 after upbeat US PMI data

EUR/USD stays below 1.0700 after upbeat US PMI data

EUR/USD stays on the back foot and trades in negative territory below 1.0700 as the US Dollar benefits from upbeat data in the American session. S&P Global reported that the economic activity in the US private sector continued to expand at a robust pace in June.

EUR/USD News

GBP/USD drops to fresh multi-week low below 1.2650

GBP/USD drops to fresh multi-week low below 1.2650

GBP/USD remains under bearish pressure and trades at its lowest level since mid-May below 1.2650. The stronger-than-forecast Manufacturing and Services PMI data from the US helps the USD hold its ground and causes the pair to stretch lower.

GBP/USD News

Gold drops below $2,340 as US yields rebound

Gold drops below $2,340 as US yields rebound

Gold loses its traction and trades deep in the red below $2,340 in the second half of the day on Friday. The benchmark 10-year US Treasury bond yield pushes higher following the upbeat PMI data from the US, weighing on XAU/USD.

Gold News

Bitcoin retraces to crucial support

Bitcoin retraces to crucial support

Bitcoin price encounters resistance at weekly highs before retracing to seek support at a crucial level, while Ethereum and Ripple align closely with Bitcoin's movements, gearing up to surpass resistance barriers and embark on upward rallies.

Read more

Week ahead – US PCE inflation the highlight of a relatively light agenda

Week ahead – US PCE inflation the highlight of a relatively light agenda

Core PCE inflation to test bets of two Fed rate cuts in 2024. Yen awaits BoJ Summary of Opinions, Tokyo CPI. Canadian CPI data also enters the spotlight.

Read more

Forex MAJORS

Cryptocurrencies

Signatures