The Downtrend in AUD/USD Not Stopping as Australian Inflation Slows

AUD/USD has been declining for the last two weeks, after being bullish since it reversed higher in November, to the resistance zone below 0.69. This pair has lowest around 250 pips form the top and after stalling for a couple of days late last week, the decline resumed again yesterday.

AUD/USD Daily Chart – The Stochastic Is Oversold

This forex pair was on a steady increase since then, gaining about 7 cents from the bottom to the top by the end  of December, with moving averages turning into support on the daily chart. The 20 daily SMA (gray) held as support for a couple of days, ith the price producing two doji candlesticks which are bullish reversing signals.

We opened a long term buy AUD/USD signal at the 20 SMA, since the retrace lower seemed complete according to the stochastic indicator, which is oversold on this timeframe. However, yesterday the decline continued and this pair finally closed below this moving average. Although, the 50 SMA (yellow) still stands ready below. This week there is some major important data on the economic calendar for this pair, with today’s inflation report from Australia and tomorrow’s inflation report from the US.

December CPI Inflation Report from Australia

• November CPI 4.3% vs 4.4% expected
• October CPI YoY was 4.9%
• November CPI MoM +0.4%
• Trimmed mean comes in at 4.6%
• Prior trimmed mean CPI was 5.3%

The monthly CPI data from Australia does not show all components of the CPI, that’ll have to wait for the quarterly data release.

• The monthly CPI indicator does, however, provide a timelier indication of inflation using the same data collected for use in the quarterly CPI. The monthly reading includes updated prices for between 62 and 73 per cent of the weight of the quarterly CPI basket, its not the full picture.
• The November result includes data for most services, which is where the RBA is most concerned about sticky inflation.
• The full quarterly reading will be on January 31 2024 for the October – December 2023 quarter.

AUD/USD Live Chart