AUD/USD Retreats from Highs Amid China’s Mixed Inflation, Awaits US CPI Data

The AUD/USD currency pair retreats from its late-January peak levels of 0.6665-0.6670, entering a phase of mild depreciation as the new...

Arslan Butt•Monday, March 11, 2024•2 min read

The AUD/USD currency pair retreats from its late-January peak levels of 0.6665-0.6670, entering a phase of mild depreciation as the new week unfolds. Early trading in the European session finds the pair slightly above the psychological 0.6600 mark, with significant downward correction yet to materialize.

Inflation Dynamics in China Stir Market Sentiment

Weekend releases of Chinese economic data presented a mixed picture, failing to alleviate deflationary concerns. Notably, China’s Consumer Price Index (CPI) experienced an uptick for the first time in four months, while the Producer Price Index (PPI) declined by 2.7% year-over-year. These developments, coupled with escalating US-China trade tensions, have pressured the Australia-linked AUD. Reports of potential US sanctions against Chinese technology firms further dampen the sentiment, influencing the risk-sensitive AUD adversely.

USD’s Struggle Amid Rate Cut Expectations

Conversely, the US Dollar’s appeal remains muted as market consensus builds around a forthcoming adjustment in the Federal Reserve’s policy. Anticipation of rate cuts starting June, fueled by a rise in the US unemployment rate, has subdued the yields on 10-year US government bonds to over a one-month low. This environment theoretically supports the AUD/USD pair by keeping USD bulls in check.

Awaiting US Inflation Data

Market participants adopt a cautious stance, hesitating to commit to substantial directional moves ahead of the forthcoming US consumer inflation report. Scheduled for release on Tuesday, this crucial data is expected to significantly influence the Federal Reserve’s rate decision timeline, thereby affecting USD demand and subsequently impacting the AUD/USD price forecast.

Overall, the AUD/USD price forecast remains tempered by broader USD price dynamics and global risk sentiment, with upcoming US economic indicators poised to provide clearer direction.

AUD/USD Price Forecast: Technical Outlook

In today’s technical analysis of AUD/USD, the pair shows a notable increase, closing at $0.66262, up by 1.60%. The pivot point stands at $0.66162, delineating the boundary between bullish and bearish momentum. Key resistance levels to watch are $0.66506, $0.66856, and $0.67296, each presenting potential ceilings in upward movement.

Conversely, support levels at $0.65733, $0.65348, and $0.64777 offer floors that may halt declines. The Relative Strength Index (RSI) is at 62, indicating a leaning towards overbought conditions but still within a bullish realm. The 50-day Exponential Moving Average (EMA) at $0.65640 supports the upward trend, sitting below the current price.

In conclusion, AUD/USD exhibits a bullish trend above the pivot point of $0.66162. A break below this level, however, could trigger a sharp selling trend, suggesting investors closely monitor these critical junctures for signs of directional shifts.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.