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  • AUD/USD went up 1.74% after US inflation dropped.
  • Investors’ hopes for a less hawkish Fed have gone up.
  • AUD/USD is getting support from rising metal prices.

Today’s AUD/USD forecast is bullish as the pair continues to rally after the negative US inflation report. The Australian dollar, a risk indicator, increased 1.74% to $0.7083 after US inflation dropped unexpectedly.

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Following a July US inflation report that was lower than anticipated, the dollar dropped significantly on Wednesday as hopes for a Federal Reserve interest rate hike cycle less aggressive than previously anticipated were raised.

Following a 20% decrease in the price of gasoline, economists surveyed by Reuters predicted a 0.2% increase in the Consumer Price Index (CPI). At 3:15 PM EDT, the dollar index, which gauges the value of one currency against a basket of other currencies, was down 1.025% at 105.26.

“This is good news for FX traders, as it was a pretty clear reaction, and you will probably see that there still should be some follow-through,” said Edward Moya, senior market analyst at OANDA.

The AUD/USD has recovered from its 2-year low in July, thanks partly to the rally in some metals. The US dollar peaked relative to many other currencies, which helped precious and industrial metals, particularly iron ore, stop their decline.

AUD/USD key events today

Initial Jobless Claims tracks how many people applied for unemployment benefits in the US for the first time in the previous week. Investors expect this value to go up to 263K from 260K

The Producer Price Index (PPI) monitors changes in the cost of manufactured goods. It is a leading indicator of inflation in consumer prices, making up most of the overall inflation. Investors expect a drop from 1.1% to 0.2%.

AUD/USD technical forecast: Bulls paused at 0.71

AUD/USD forecast

The 4-hour chart shows a steep bullish move that has stopped at around 0.71017. The price has pulled back from the resistance level and might retest support at 0.70454. It might also consolidate until the 30-SMA, which supports the bullish move, catches up.

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Bears came in when the RSI got overbought, but the uptrend will continue as long as the price stays above the 30-SMA and RSI keeps trading above 50.

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