Australian Dollar Forecast: AUD/USD Rebounds Ahead of Australia CPI

Australian Dollar Outlook: AUD/USD

AUD/USD may attempt to retrace the decline from last week as it bounces back ahead of the monthly low (0.6286), but the update to Australia’s Consumer Price Index (CPI) may drag on the exchange rate as the report is anticipated to show slowing inflation.

Australian Dollar Forecast: AUD/USD Rebounds Ahead of Australia CPI

AUD/USD appears to be trading within a defined range after failing to close above the 50-Day SMA (0.6402), and the exchange rate may consolidate over the remainder of the month as it continues to hold above the November 2022 low (0.6272).

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Australia Economic Calendar

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However, data prints coming out of Australia may generate a bearish reaction in AUD/USD as the headline and core CPI are expected to narrow in the third quarter of 2023, and signs of slowing inflation may keep the Reserve Bank of Australia (RBA) on the sidelines as ‘members observed that the labour market had reached a turning point and output growth had slowed.’

In turn, the RBA may keep the official cash rate (OCR) at 4.10% at the next meeting on November 7 as ‘the tightening of monetary policy since May 2022 was still permeating through the economy,’ but a higher-than-expected CPI print may fuel the recent rebound in AUD/USD as it puts pressure on Governor Michele Bullock and Co. to further combat inflation.

With that said, AUD/USD may continue to trade within the monthly range as it holds above the November 2022 low (0.6272), but the exchange rate may track the negative slope in the 50-Day SMA (0.6402) amid the failed attempts to close above the moving average.

AUD/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; AUD/USD on TradingView

• AUD/USD seems to be trading within a defined range as it holds above the November 2022 low (0.6272), with a move above the 0.6380 (78.6% Fibonacci retracement) to 0.6410 (50% Fibonacci extension) region raising the scope for a test of the monthly high (0.6445).
• However, AUD/USD may track the negative slope in the 50-Day SMA (0.6402) amid the failed attempts to close above the moving average, with a breach of the monthly low (0.6286) bringing the November 2022 low (0.6272) back on the radar.
• A break/close below 0.6240 (61.8% Fibonacci extension) opens up the 2022 low (0.6170), with the next area of interest coming in around 0.6130 (23.6% Fibonacci retracement).

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--- Written by David Song, Strategist

Follow on Twitter at @DavidJSong