**Australian Dollar Forecast: AUD/USD Bulls Eye Higher Ground as Inflation Data Looms**
*Adapted from original insights by Matt Weller, FOREX.com*
### Introduction
The Australian dollar has shown a resurgence as it reclaims key technical territory against the US dollar. This recovery follows a period of turbulence characterized by risk aversion and macroeconomic uncertainty. With the market’s gaze fixed on the upcoming US Consumer Price Index (CPI) inflation data, traders are seeking clues about the next policy moves from central banks and how these might impact the AUD/USD pair. In this analysis, we delve into the recent AUD/USD price action, technical developments, and the fundamental forces that could shape its short-term fate.
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### Recent Developments: AUD/USD Moves Above 200-Day Moving Average
The Australian dollar, commonly referred to as the Aussie, staged an impressive rally against the US dollar as it reclaimed the 200-day simple moving average (SMA), a widely watched indicator that often distinguishes between bullish and bearish market sentiment. The move signals a shift in momentum and points to the growing optimism among traders regarding the Aussie’s prospects.
#### Key Points:
– **The AUD/USD pair had recently dipped to a low near 0.6600 but shifted upward, moving above the 200-day SMA around the 0.6640 level.**
– **This technical breakout is significant; sustained gains above this area could embolden buyers and trigger further upside moves.**
– **The momentum follows a pattern of higher lows, suggesting accumulating demand and a reduction in downward pressure.**
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### What Sparked the Australian Dollar Revival?
The recovery in the Aussie can be traced to a combination of local and global factors:
#### Australian Domestic Drivers
– **Interest Rate Outlook**: Recent statements from the Reserve Bank of Australia (RBA) have highlighted persistent upside risks to inflation. While the RBA left rates unchanged at its June meeting, policymakers maintained a hawkish stance, implying potential for further tightening if inflation persists.
– **Australian Economic Data**: Recent data points, including robust retail sales and a stronger-than-expected GDP reading, indicate resilience in the Australian economy. This contrasts with weakness seen in other parts of the world and underpins the currency’s support.
#### Global Influences
– **Shifts in Risk Sentiment**: Signs of stabilization in global equity markets and improving risk appetite have buoyed commodity-linked currencies like the Australian dollar.
– **Chinese Economic Developments**: China remains Australia’s largest trading partner. Positive signals from Chinese manufacturing and ongoing stimulus measures have supported demand for Australian exports, especially in the commodities sector.
– **US Dollar Fluctuations**: The US dollar’s fortunes have recently ebbed as Federal Reserve officials caution against further rapid rate hikes, and as US economic indicators point to a potential slowdown.
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### Focus on US CPI: The Next Big Catalyst
All eyes are now on the forthcoming US Consumer Price Index (CPI) inflation report, which is
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