AUDUSD drops 0.33% amidst fiscal changes and inflation data

AUDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.33%	-21.8 Pips
Week to-date	0.51%	33 Pips
June	1.45%	93 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)
Fri 03:00 PM USD Index of Consumer Sentiment

What happened lately

In May 2025, the United States experienced significant economic movements as reported by various statistics bureaus. The U.S. Monthly Treasury Budget Statement showed a substantial decline, recording a budget deficit of -$316 billion as opposed to a surplus of $258 billion observed in April. This shift represents a considerable change in fiscal dynamics, likely impacting government spending and debt strategies. Concurrently, the U.S. CPI inflation rate saw a marginal increase to 2.4% from 2.3% in April, indicating a slight uptick in consumer price levels. However, when food and energy were excluded, the CPI inflation rate remained steady at 2.8%, signaling stability in core inflation. While the general CPI inflation rate for May decreased marginally to 0.1% from April’s 0.2%, the core month-over-month CPI excluding food and energy sectors bowed down to 0.1% from the previous 0.2%. These figures reflect underlying stability in core pricing amidst broader fiscal volatility.

The revelations from the U.S. economic data are poised to affect the AUDUSD currency pair. The decline in the U.S. Treasury Budget surplus paired with increased inflation may stoke speculations of fiscal instability, potentially weakening the USD against other currencies, including the AUD. However, the steadiness in core inflation could mitigate this impact, retaining investor confidence in the dollar’s purchasing power. The AUDUSD pair, which dropped by 0.33% to 0.65004, is currently in consolidation, suggesting a cautious market stance as it anticipates upcoming high-impact events, such as the U.S. PPI excluding food and energy sectors on Thursday and the U.S. Index of Consumer Sentiment on Friday. These events could either bolster the USD if positive sentiments prevail or weaken its standing further if downside risks are highlighted, influencing the AUD’s relative strength against the USD.

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What can we expect from AUDUSD today?

AUDUSD on Wednesday dropped -0.33% to 0.65004. 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 0.6482 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 0.65458 or trades above daily pivot 0.65139. Break above could target R1 at 0.65323. While to the downside, we are looking at 0.6482 (S1) and daily low of 0.64955 as support levels. AUDUSD need to break on either side to indicate a short-term bias. A close below 0.64955 would indicate selling pressure.

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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