**AUD/USD Hovers Near Ten-Month High as Traders Await US CPI Inflation Data**
*Based on the article by Anil Panchal for FXStreet, with supplementary analysis.*
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The AUD/USD currency pair has recently been trending near its highest levels since August 2023, signaling robust investor confidence in the Australian dollar relative to the US dollar. This surge comes as market participants await critical US Consumer Price Index (CPI) inflation data, which holds the potential to reshape the interest rate outlook from the Federal Reserve and influence global currency markets.
**Current Market Overview**
– AUD/USD is trading around the 0.6700 mark, close to the 10-month high seen earlier in June.
– The pair experienced upward momentum amidst weakening US dollar sentiment and resilient Australian economic indicators.
– Traders are exercising caution ahead of the upcoming US CPI release, as the inflation print could provide clarity on the Federal Reserve’s monetary policy direction.
**What’s Driving AUD/USD Higher?**
1. **Softening US Dollar Sentiment**
– The US dollar has been under pressure since May, weighed by expectations that the Federal Reserve will soon start cutting interest rates.
– Weaker US labor market data and subdued ISM Services PMI readings have added to the narrative of a less restrictive Fed.
– The greenback’s softness is making higher-yielding and commodity-linked currencies, including the Australian dollar, more attractive.
2. **Positive Australian Economic Indicators**
– Recent data from Australia, such as stronger-than-expected retail sales and solid employment numbers, have bolstered the currency.
– The Reserve Bank of Australia (RBA) has kept a hawkish tone, suggesting the potential for further rate hikes if inflation persists.
– The country’s trade surplus remains robust, supported by resilient demand for key commodities like iron ore from China.
3. **Improved Risk Appetite Globally**
– Stock markets worldwide have seen steady gains, reflecting increased investor appetite for riskier assets.
– The “risk-on” sentiment tends to benefit the Australian dollar due to its close ties to global growth and commodities demand.
**Technical Analysis: Eyes on the 0.6700 Resistance**
– AUD/USD’s near-term technical outlook remains positive as long as it stays above the key short-term support levels (notably the 50-day and 200-day simple moving averages).
– Resistance is seen at around 0.6715-0.6730, corresponding to previous highs reached in July and August 2023.
– If bullish momentum persists, the pair could target 0.6800 in the medium term.
– On the downside, immediate support is noted near 0.6650 and then at 0.6600.
**Upcoming US CPI Data: The Next Major Catalyst**
The US Consumer Price Index (CPI) is widely regarded as one of the most important monthly economic indicators. The Bureau of Labor Statistics’ release can move global asset prices, especially currencies, due to
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