The Australian Dollar (AUD) dipped on Thursday, losing 0.30% to 0.6265, despite weakness in the US Dollar (USD). The pair remained below the key 0.6300 level as traders digested higher-than-expected US inflation data and Federal Reserve (Fed) Chair Jerome Powell's cautious testimony before Congress.
The Australian Dollar (AUD) experienced a slight decline of 0.30% on Thursday, settling at 0.6265. Despite a softening in the US Dollar (USD), the AUD/USD pair remained below the significant 0.6300 level. This downward movement occurred amidst a backdrop of cautious market sentiment as traders evaluated recent US inflation data and Federal Reserve (Fed) Chair Jerome Powell's testimony before the US Congress.
Recent US inflation data revealed a stronger-than-anticipated increase, with the headline Consumer Price Index (CPI) rising 0.5% month-over-month (MoM) compared to a forecast of 0.3% and the core CPI jumping 0.4%, exceeding expectations. This development reinforced the Fed's hawkish stance and provided support to the USD. Furthermore, Fed Chair Powell's cautious remarks during his second congressional testimony emphasized the Fed's independence and commitment to its inflation target of 2%. He acknowledged that inflation progress had slowed but reiterated the central bank's priority to achieve price stability.On the Australian front, softer fourth-quarter (Q4) CPI data indicated a headline inflation rate of around 2.5% year-over-year (YoY), down from 2.8%, while the trimmed mean CPI fell to a three-year low of 3.2%. These figures fueled market expectations for a 25 basis point reduction in the Reserve Bank of Australia (RBA) interest rate in February. However, ongoing trade tensions with China continue to exert downward pressure on the AUD. Despite a recent rebound in commodity prices, sluggish business activity in China remains a concern for the Australian economy. Meanwhile, the USD has regained strength due to persistent risk aversion and anticipation of tighter monetary policy from the Fed, limiting further upside potential for the AUD/USD pair.Technically, the AUD/USD pair has encountered resistance at the key 0.6300 level, indicating persistent selling pressure. The Relative Strength Index (RSI) stands at 55, suggesting that while there is some buying interest, momentum remains subdued. Conversely, the Moving Average Convergence Divergence (MACD) histogram displays rising green bars, hinting at a gradual building of bullish momentum. With support around 0.6200 and resistance near 0.6300, traders are closely monitoring upcoming US economic data and RBA signals to gauge the next directional move for AUD/USD.
AUD/USD Australian Dollar US Dollar Inflation Federal Reserve Reserve Bank Of Australia Trade Tensions Iron Ore Commodity Prices
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