AUDUSD Shakes of Australian Inflation Data

During the initial hours of Wednesday’s trading session, the AUDUSD currency pair experienced a subtle uptick following the release of Australia’s latest CPI data. The monthly CPI indicator revealed a modest contraction to 4.3% from the previous 4.9%, falling short of the 4.4% consensus.  

This marked the lowest reading since January 2022, reinforcing the belief in the market that the Reserve Bank of Australia is unlikely to pursue further tightening in its current monetary policy trajectory. However, the landscape shifted yesterday with Australia’s robust retail sales data, surpassing expectations with a noteworthy 2% month-on-month increase, well above the anticipated 1.2%. This, coupled with a renewed appetite for riskier assets, provided a boost to the currency pair. Yet, with the impending US CPI report, the week’s unfolding dynamics remain unpredictable and intriguing. 


On the 4H chart, a descending triangle has emerged as the currency pair entered a consolidation phase following the recent downtrend. Volumes have been declining, suggesting the market is awaiting a catalyst to gauge the future direction, which could come in the form of tomorrow’s CPI release. 

The triangle support is established at a psychological demand zone near 0.6678. Should the breakdown occur, the 61.8% Fibonacci golden ratio could be a level of interest at 0.6669. At this level, a retracement of the breakdown could occur. However, if the pair moves lower, the breakdown could be sustained. This could see a test of lower support at 0.6651 and 0.6631.  

Alternatively, if the triangle support continues to hold, the bulls face their first hurdle at the 25-SMA (green line) near 0.6705. This converges with the Fibonacci midpoint at the dynamic resistance of the triangle and could prove to be a challenging level to breach. However, if the pair does move higher, the trend reversal could occur toward 0.6720 and 0.6735. 


Despite the Australian inflation data coming in cooler than expected, the trading volume for the AUDUSD currency pair has been subdued as market participants await the crucial US CPI report. The key level to look out for is the triangle support at 0.6678, where the sellers could attempt a breakdown if the data supports their cause. 

Sources: Koyfin, Tradingview 

Piece written by Tiaan van Aswegen, Trive Financial Market Analyst 

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