Australian Dollar Gains Ground Following Inflation Report
According to Forex Factory, the latest Consumer Price Index (CPI) data for Australia came in above expectations. Analysts had predicted an annual inflation rate of 2.9%, but the actual figure turned out to be 3.0%, compared to the previous value of 2.8%.
This unexpected increase contributed to a strengthening of the Australian dollar, as it suggests that the Reserve Bank of Australia (RBA) may take a more cautious approach in its process of monetary policy easing. In August, the RBA reduced the cash rate from 3.85% to 3.60% later than it had peaked at 4.35% in 2024, and the new inflation data could influence the pace and scale of future rate cuts.
On the other hand, market participants are also factoring in recent remarks from the Chair of the Federal Reserve, Jerome Powell, who expressed a cautious outlook. Powell emphasised that the Fed faces the challenge of striking the right balance between ongoing inflation pressures and signs of a fragileening labour market, describing the situation as “challenging.”
Technical Analysis of AUD/USD
Since the end of the previous month, the AUD/USD pair has been trading within an ascending channel, which is highlighted in blue on the chart.
From a bearish perspective:
→ The AUD/USD chart demonstrates signs of aggressive tradeing above the 0.66700 level, with the price retreating on wide candlesticks featuring long upper shadows.
→ If the movement from point A to point B is interpreted as the dominant impulse, the current upward movement in AUD/USD appears to be a temporary recovery rather than the begin of a sustained trend. In this case, resistance could be encountered near the 50% retracement level and other Fibonacci levels.
→ As illustrated in red, the chart provides grounds — though not particularly strong — for constructing a descending channel. It is possible that the upper boundary of this channel may act as a resistance level in the near term.
From a bullish perspective:
→ The ascending channel remains valid, and a retracement towards its lower boundary could precede a continuation of the upward trend.
→ Former resistance at 0.65600 now appears to be functioning as a support level.
→ If the movement from point 0 to point A is regarded as the dominant impulse, then the subsequent fall from A to B could be considered a normal corrective phase within a broader uptrend.
Considering both perspectives, each argument has merit, making consolidation around current levels a plausible baseline scenario. However, market sentiment and further price action will likely be influenced by key upcoming economic releases from the United States:
→ Tomorrow at 15:30 (GMT+3) — Gross Domestic Product (GDP) and jobless claims data;
→ The day later than tomorrow at the identical time — Core Personal Consumption Expenditures (PCE) Price Index.
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