The Australian Dollar eased back toward 0.6600 in Thursday’s European session after touching a 10-month peak of 0.6636 the day before. The modest pullback comes as the US Dollar regained ground ahead of the August Consumer Price Index report, scheduled for release at 12:30 GMT. At the time of writing, AUD/USD trades near 0.6620, still holding within its upward channel on the daily chart. The technical outlook suggests a continuation of the bullish bias, reinforced by price action remaining above the nine-day EMA, which signals short-term momentum is still supportive. Resistance is located at 0.6635, the recent high, followed by 0.6650 at the channel’s upper boundary. A break above this area could pave the way toward 0.6687, the 11-month top from November 2024. On the downside, initial support is seen at 0.6572, the level of the nine-day EMA, with stronger backing at 0.6560 along the channel floor. A move below would shift sentiment bearish and expose the 50-day EMA at 0.6517, and possibly extend toward the August low of 0.6414.
The US Dollar Index is trading close to 98.00, its highest in three days, as investors position themselves ahead of inflation data. Market expectations point to headline CPI rising 2.9% year-on-year from 2.7% previously, while core CPI is forecast to remain steady at 3.1%. Both monthly measures are projected to climb 0.3%. Traders continue to anticipate that the Federal Reserve will deliver a 25 basis point rate cut at its policy meeting next week, with the chance of a 50 bps cut priced around 12%. Recent data has highlighted cracks in the US economy. Producer prices slowed more than expected to 2.6% year-on-year in August, and labor market revisions indicate employment may have been overstated by nearly 911,000 jobs through March 2025. Chicago Fed President Austan Goolsbee warned this week that persistent inflation remains a concern and suggested the committee may not be unanimous on the timing of cuts.
In Australia, consumer inflation expectations jumped to 4.7% in September from 3.9%, limiting the Reserve Bank of Australia’s scope for near-term easing. However, weak demand remains an issue, with Westpac Consumer Confidence dropping to 95.4 from 98.5. According to Westpac’s Matthew Hassan, further policy support could still be required, with a 25 bps RBA cut projected in November followed by two more in 2026. From abroad, China’s CPI fell 0.4% in August versus forecasts of a 0.2% decline, underlining soft consumer demand in Australia’s largest trading partner and weighing on the outlook for the Aussie.
Overall, AUD/USD remains in a constructive trend above 0.6560, and a break above 0.6650 would open the path to fresh 11-month highs. However, the near-term trajectory will hinge on US inflation figures. Stronger data could lift the Dollar and slow the Aussie’s momentum, while weaker numbers may reinforce expectations of Fed easing and provide AUD/USD with another leg higher.
