Home AUD/USD Price Analysis: Easing US Inflation Weighs on the Dollar
AUD/USD Daily Outlooks

AUD/USD Price Analysis: Easing US Inflation Weighs on the Dollar

  • The dollar is declining due to the cooling inflation in the United States.
  • The RBA has appointed its first female governor.
  • Australia’s inflation remains significantly above the RBA’s target range of 2% to 3%.

Today’s AUD/USD price analysis is bullish. The decline in the dollar is gaining momentum due to the cooling inflation in the United States, which bodes well for the Australian dollar.

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Notably, the dollar has dropped by almost 13% against a basket of currencies since reaching its two-decade high last year. Its depreciation accelerated following the release of softer-than-anticipated inflation data in the United States on Wednesday and Thursday. Consequently, markets believe that the Federal Reserve is approaching the conclusion of its cycle of raising interest rates.

The greenback’s decline coincides with a recent easing of US Treasury yields.

Elsewhere, Michele Bullock will assume the role of the Reserve Bank of Australia’s first female governor in September. The position does not come with a grace period, as Treasurer Jim Chalmers announced her appointment on Friday. 

As Bullock, the current deputy governor prepares to step into her new position, she will likely face a dual economic challenge.

The RBA has already raised rates 12 times during the current tightening cycle. Moreover, the bank might increase rates in either of the two upcoming monetary policy meetings before the leadership transition.

However, inflation remains significantly above the RBA’s target range of 2% to 3%, with a current rate of 5.4%. Simultaneously, the development of the El Nino phenomenon in the Pacific Ocean will likely bring hot and dry weather to Australia. This could potentially lead to reduced crop yields and higher food prices.

AUD/USD key events today

There won’t be any key economic reports from Australia or the US today, so trading might be thin. Investors will continue digesting recent US inflation figures.

AUD/USD technical price analysis: Bulls breaking the 0.6900 resistance level.

AUD/USD technical price analysis
AUD/USD 4-hour chart

AUD/USD has paused after a huge rise following a break above the 0.6800 resistance level. The price currently trades slightly below the 0.6900 resistance level. At the same time, the price is far above the 30-SMA, showing bulls are in charge. 

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However, the RSI shows extreme bullish momentum near the overbought region. This might allow bears to retrace the recent move as bulls rest. Still, the bullish trend remains, and bulls might soon take out the 0.6900 resistance level.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.