Australian Dollar slides to three-week low

The AUD/USD pair is declining, reaching 0.6539 on Wednesday. The Australian dollar is heading back to a three-week low following the release of softer-than-expected consumer price index (CPI) data from Australia.

For February 2024, inflation in Australia stood at 3.4%, unchanged from the previous report, in contrast to the anticipated slight increase to 3.5%. This marks the lowest inflation level since November 2021.

Last week, the Reserve Bank of Australia (RBA) held its meeting and decided to keep the interest rate unchanged at 4.35% annually. The rate remains at a 12-year peak, unchanged for the third consecutive meeting. The RBA’s stance has slightly shifted; the regulator no longer indicates further rate hikes, confident that inflation will ease pressure. This opens the possibility of rate reductions later in the year.

The US dollar is strengthening today amid growing expectations that the Federal Reserve will maintain interest rates high for an extended period. This contrasts with forecasts of monetary policy easing by other central banks, some of which could occur before the Fed’s actions.

Technical analysis of AUD/USD

On the H4 chart of AUD/USD, a correction to 0.6558 has been completed. The market is continuing to develop a declining wave to 0.6486. After reaching this level, a consolidation range is expected. With a downward exit from this range, there is a potential for further decline to 0.6417. This target is local. The MACD indicator supports this scenario, with its signal line below zero and strictly directed downwards.

On the H1 chart, AUD/USD is forming a declining wave structure towards 0.6486. After reaching this level, a corrective phase to 0.6533 may occur, followed by a decline to 0.6470, with the potential to continue the trend towards 0.6417. The Stochastic oscillator confirms this scenario, with its signal line above 80 and preparing for a decline to 20.