AUDUSD Wary Ahead of Inflation and Interest Rate

The AUDUSD currency pair remained subdued ahead of today’s Federal Reserve monetary policy meeting. Despite Australian retail sales slipping to -2.7%, diverging from the expected -1%, the muted response suggests traders are exercising caution before key data releases.  

Tomorrow’s Australian inflation report is anticipated to spark activity and could force some price action in the early trading session. After that, all eyes will be on Jerome Powell’s tone during the Federal Reserve decision for clues about the timeline of future interest rate cuts. The market reflects a delicate balance, poised for potential shifts in response to economic indicators and Powell’s commentary. 


On the 4H chart, an ascending triangle is in play, with the currency pair attempting to push through the resistance at 0.6611. However, with the market’s caution and declining volumes, a retest could occur, potentially setting the pair up for a bullish pivot. 

Resistance at the 100-SMA (orange line) near 0.6631 could be the first hurdle to the breakout’s momentum. Clearance above this level could confirm the sustainability of the run and potentially drive the price action toward 0.6649 and 0.6678. If the bullish momentum is maintained, the Fibonacci midpoint at 0.6698 could become a pivotal level of interest. 

However, if the price fails to clear 0.6631, a pullback could occur back within the triangle formation. The 25-SMA (green line) and 50-SMA (blue line) converge with the dynamic triangle support and could present a challenging barrier to cross. However, a breakdown here could send the pair toward a demand zone at 0.6567 in the upcoming session.  


Despite a slowdown in Australian retail sales, the AUDUSD currency pair remained subdued in the Tuesday session, anticipating the Federal Reserve’s interest rate decision and the Australian inflation data due later this week. The triangle’s resistance at 0.6611 could be a crucial one to keep an eye on as the day progresses. 

Sources: Koyfin, Tradingview 

Piece written by Tiaan van Aswgen, Trive Financial Market Analyst 

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