Audusd rises amid australia’s inflation data and upcoming fed decision

AUDUSD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	0.32%	20.6 Pips
Week to-date	0.36%	23.5 Pips
May	1%	64.1 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)

What happened lately

Australia’s TD Securities Inflation for the 12 months up to April saw an increase to 3.3%, up from 2.8% in March. This upward trend in inflation suggests that price pressures in the Australian economy are growing, possibly resulting in a more cautious approach by the Reserve Bank of Australia (RBA) in its monetary policy. As inflation rises, there is often speculation about potential tightening of monetary policy, which could impact consumer spending and investment. However, inflation that is within a manageable range may also indicate a recovering economy, as demand picks up and drives prices higher.

In the United States, the key economic event on the horizon is the Federal Reserve’s interest rate decision scheduled for Wednesday. The Federal Funds Rate is crucial, as it influences the borrowing costs for consumers and businesses across the globe. A decision to raise rates could strengthen the USD, as higher returns attract investors seeking yield, whereas a decision to maintain or lower rates might suggest caution about the economic outlook.

The AUDUSD exchange rate on Monday rose by 0.32% to 0.64611. The pair currently appears to be in a consolidation phase, waiting for fresh catalysts. The increase in Australia’s inflation can potentially lead to a stronger Australian dollar if investors anticipate rate hikes from the RBA in response to rising inflationary pressures. However, the upcoming Fed interest rate decision on Wednesday is likely to be pivotal for the AUDUSD pair. If the Fed signals a more hawkish stance with perhaps a rate increase, it could provide support for the USD, potentially diminishing the strength of the Australian dollar against the greenback. In contrast, a dovish Fed decision may lead to the opposite effect, favoring an upward movement for the AUDUSD as investors turn away from the USD. Therefore, the interplay between Australia’s inflation developments and the US’s monetary policy actions will significantly influence the direction of the AUDUSD in the near term.

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What can we expect from AUDUSD today?

AUDUSD on Monday rose 0.32% to 0.64611. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for AUDUSD looks mixed as the pair is likely to consolidate above 0.6432 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.64937 or trades above daily pivot 0.64629. Break above could target R1 at 0.64919. While to the downside, we are looking at 0.6432 (S1) and daily low of 0.64338 as support levels. AUDUSD need to break on either side to indicate a short-term bias. A break above 0.64937 may suggest continuation after recent positive movement.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out:

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