- Australian inflation decreased from 33-year highs in the first quarter.
- Futures only predict a 9% possibility of a 0.25-point RBA hike.
- Tuesday saw a nearly 50% decline in First Republic Bank shares.
Today’s AUD/USD price analysis is bearish. Australian inflation decreased from 33-year highs in the first quarter. The cost of living witnessed the smallest increase in more than a year. Core inflation declined below estimates, indicating less pressure for another interest rate hike.
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Investors reacted by reducing the odds that the Reserve Bank of Australia (RBA) will resume hiking rates at its meeting on May 2. The bank stopped hiking rates in April after a 10-hike streak
Currently, futures only predict a 9% possibility of a 0.25-point increase in the 3.6% cash rate.
The market went in that direction overnight after a local US bank revealed a significant outflow of deposits. It was an indication that the world’s financial challenges were still present.
Consumer price index (CPI) growth in the March quarter was 1.4%, slightly higher than market expectations of 1.3% but the lowest increase since late 2021.
However, core inflation continues to exceed the RBA’s target range of 2-3%. Policymakers have been concerned that it might feed a price wage spiral without additional tightening.
On Wednesday, the US dollar held onto overnight gains as concerns over the US banking industry and economy dampened investor optimism.
Tuesday saw a nearly 50% decline in First Republic Bank shares. It revealed a more than $100 billion drop in deposits for the quarter due to waning consumer confidence in the banking industry.
AUD/USD key events today
The US will release the core durable goods orders report, a good measure of ordering trends. It will also give a picture of the economy at large.
AUD/USD technical price analysis: Oversold Aussie may bounce up
AUD/USD has fallen rapidly in the 4-hour chart. The decline came after the price broke below the 0.6700 support and retested it as resistance. The bearish bias here is strong since the price trades below the 30-SMA with the RSI in the oversold region.
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The price has broken below the 0.6625 support level and might reach the 0.6600 support. However, we might get a deeper pullback soon as the price is oversold. A pullback could retest the 30-SMA resistance. The downtrend will likely continue below 0.6600.
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Saqib Iqbal
