Weak inflation data increases pressure on the AUD
During Wednesday's Asian session, AUD/USD shows an uncertain decline, developing a downward trend in the short term.
At the moment, the pair is testing the level of 0.6235, while market participants are analyzing the latest macro statistics on inflation in Australia.
The published data indicate further disinflation, which may be an argument in favor of a soft monetary policy of the Reserve Bank of Australia (RBA).
- The December consumer price index (CPI) accelerated from 2.3% to 2.5%, but remained at 0.2% in quarterly terms (against the forecast of 0.3%).
- In annual terms, the indicator decreased from 2.8% to 2.4%, while 2.5% was expected.
- Core inflation, calculated by the RBA using the truncated average method, also turned out to be lower than expected:
Slowed down from 3.6% to 3.2% in annual terms (the forecast was 3.3%).
In quarterly terms – from 0.8% to 0.5% (0.6% expected).
The slowdown in inflation, along with a drop in business confidence, indicates the weakness of the economy, which increases the likelihood of holding interest rates unchanged for a longer period of time or even lowering them later. This factor puts pressure on AUD.
Markets are waiting for the Fed's decision and Trump's new tariff initiatives
The US Federal Reserve meeting will be held today at 21:00 (GMT+2). Although most investors are confident that the rate will remain at 4.50%, markets are closely monitoring the regulator's rhetoric regarding future plans.
The trade policy of Donald Trump adds additional uncertainty. Despite the fact that the promised high tariffs on Chinese imports have not yet been introduced, 25% duties on products from Canada and Mexico will begin to take effect on February 1. Moreover, according to Financial Times sources, Scott Bessent, the new candidate for the post of Finance Minister, advocates the introduction of universal import tariffs with a base rate of 2.5%, which will be reviewed monthly.
The escalation of protectionist measures by the United States may lead to increased volatility in the foreign exchange market, which will affect the AUD/USD positions.
AUD/USD Technical Analysis for today
On the daily chart, the Bollinger Band indicator shows moderate growth, but the price range of the indicator is narrowing, which indicates uncertainty in the short term.
- The MACD turned down, forming a sell signal
- Stochastic indicates a continuation of the decline, but it is already approaching the oversold zone (the "20" level), which increases the likelihood of a short-term rebound.
Trading Scenarios
- Selling after a confident breakdown down to 0.6225, target 0.6178, stop loss 0.6250.
- Buy on a rebound from 0.6225 and an upward breakout of 0.6250 resistance, target 0.6300, stop loss 0.6225.
The current dynamics of AUD/USD largely depends on the tone of the Fed's statements and the course of US trade policy. In the short term, pressure on the Australian dollar remains, but local rebounds are possible against the background of technical factors.