After yesterday's sharp plunge caused by the release of the US inflation report, on Wednesday AUD/USD is consolidating near the local lows of September 8, keeping the potential for further decline.
Yesterday's release recorded a rise in core inflation in the United States from 5.9% to 6.3% and a decline in the consumer price index from 8.5% to 8.3% with a forecast of 8.1%.
With such raw data, the Fed will have to step up its aggressive tightening of monetary policy. Investors are expecting the regulator to announce its third rate hike of 75 basis points on September 21, although some investors believe the Fed will go even further and raise the rate by 1.0% at once. The probability of such a scenario today is 34%.
Tomorrow the labor market report comes out in Australia. According to the forecasts the growth of employment will be 35 thousand places. The RBA will also release the inflation expectations bulletin for September.
AUD/USD Technical analysis
The CCI and the Bollinger Bands are showing a steady decline.
MACD indicator has returned to negative range and is holding a sell signal.
Stochastic Oscillator has shifted back to decline after the local growth.
Trade is going near the strong level 0.6700. If the pair strengthens below this level, we will form short positions with Take Profit at 0.6600. We will place a stop loss at 0.6750.
If AUD/USD rebounds from 0.6700, we recommend waiting for a breakout resistance at 0.6750 and only then open a buy position with the nearest target at 0.6853. Placement of a stop loss at 0.6700.