Australian Dollar Under Pressure After Inflation Misses Forecasts

The Australian dollar came under renewed pressure on Wednesday, falling nearly 0.5% after Australian inflation data came in below expectations. Consumer prices rose 3.9% in the second quarter, down from the previous quarter and below forecasts of 4.1%, while the June monthly inflation indicator eased to 3.8% from 4.0% in May, further reducing expectations for an RBA rate hike this year.

The softer inflation backdrop mirrors trends seen across several major economies, partly reflecting the decline in geopolitical tensions following the recent U.S.-Iran ceasefire. However, any resurgence in hostilities could reignite inflationary pressures and alter the current outlook for interest rates.

AUD/USD fell to its lowest level in almost two weeks, retracing more than half of its recovery from 0.6865 to 0.7026 and reinforcing emerging bearish signals. Technical indicators on the daily chart continue to deteriorate, with the RSI trending lower near 42 and the 14-day momentum indicator slipping toward the neutral line.

A daily close below the 50% Fibonacci retracement level at 0.6945 would strengthen the bearish outlook, while the pair remains capped below the former range floor at 0.6965, now reinforced by the 20-day moving average.

A decisive break below 0.6945 could expose the next downside targets at 0.6926, representing the 61.8% Fibonacci retracement, followed by the key 0.6900 area, where the 76.4% Fibonacci level converges with the 200-day moving average.

Market attention now shifts to the Federal Reserve’s policy decision later today. While rates are widely expected to remain unchanged, investors will closely scrutinize the Fed’s guidance for clues on the direction of monetary policy in the months ahead.

Res: 0.6965; 0.6981; 0.7000; 0.7011
Sup: 0.6926; 0.6911; 0.6900; 0.6881