AUD/USD Price Drops After US Inflation Data and Slowdown in China

• The Retails Sales disappointment heavily impacted the Aussie
• Inflation rates in the US show a stronger economy with the Fed meeting around the corner
• Speculations about tapering drive the dollar performance

The AUD/USD price analysis suggests a bearish price action. On Tuesday, two major countries’ economies released data that directly affects the pair.

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By the end of the day, the pair suffered a major fall and finished barely above 0.7320. On one side, the data from Chinese industrial activity was disappointing for buyers of the pair. China’s industrial production growth increased by 5.3% YoY, 0.5% lower than the expected 5.8%, and below the previous 6.4%. But the major disappointment was The Retail Sales YoY. Forecasted 7%, it only grew by 2%. China is Australia’s main client.

On the American side, the US economy looks stronger after the release of the inflation data. The development of the economy in August outperformed the forecast, and inflation rates were lower than expected, supporting the theory that high inflation is a temporary phenomenon and raising questions about the future decision of the Fed.

We have some events to follow for the rest of the week in both the US and Australian economies. On Wednesday, Australia will publish the Employment Change and the Unemployment data. The US will release the Retail sales MoM data on Thursday, where they expect a decrease of 0.8%. Finally, we will know the Friday Michigan Consumer Sentiment data.

As a result of negative news from the outside and fear regarding the economy’s performance due to the Covid-19, the pair faces negative pressure. So, risk-averse investors are encouraged to invest in the US Dollar as a safe haven. Hence, the pair is likely to test the resistance level of 0.7367 before going down to break the 0.7300 support and keep falling toward the 0.7125 level.

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AUD/USD price technical analysis: Key SMAs to support

On Monday, the 50-hour SMA stopped an uptrend that raised the price by 30 pips. On Tuesday, the resistance remained, and the pair price fell significantly towards the support level of 0.7310.

If bears break that price, the psychological 0.7300 level will be the big next support level. This after breaking the 50 DMA level at 0.7355. However, if the Aussie manages to recover and breaks the 0.7367 line (50-hour SMA), the next target for bull will be 0.7400.

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