- The safe-haven dollar fell on Wednesday after improving risk sentiment.
- Market attention is on the US inflation report.
- Philadelphia Fed President Patrick Harker said interest rates were already high enough.
Today’s AUD/USD price analysis is bullish. The safe-haven dollar fell Wednesday on improved risk sentiment despite new signs of a struggling Chinese economy.
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Dollar selling by China’s state-owned banks also helped the yuan recover from a one-month low. And this happened when China went into deflation. Moreover, it also had a positive impact on the Australian dollar, rebounding from its multi-month low. The Australian dollar fell on Tuesday, hitting its lowest level since June 1 at US$0.6497.
The dollar softened despite concerns over global economic growth stemming from China’s economic data. Notably, July saw consumer prices fall for the first time in over two years in China.
Meanwhile, the US inflation data due out on Thursday will be very important. It will shape the market’s understanding of the Federal Reserve’s course of action.
It’s worth noting that there have been mixed signals from Fed officials recently. Philadelphia Fed President Patrick Harker said interest rates were already high enough. He said the Fed could keep interest rates at current rates barring a sharp change in recent economic data. This is in line with the view of Atlanta Fed President Rafael Bostic.
But the Fed’s stance has been mixed. Fed President Michelle Bowman hinted Monday that further rate hikes are possible. Meanwhile, traders remain strongly in favor of a quarter-point rate hike at the next policy meeting in September, with an 86.5% chance.
AUD/USD major events today
Investors are not expecting any significant Australian or US announcements today, so the pair is likely to hold firm ahead of the US inflation report.
AUD/USD Technical Price Analysis: AUD returns after support at 0.6500.
On the chart, AUD/USD has bounced back after finding support at the 0.6500 level. The price is currently above the 30-SMA while the RSI is above 50. This indicates an imminent shift from bearish to bullish sentiment.
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The bulls will take the lead once the price closes above the 30-SMA. However, the price needs to break out of the 0.6600 resistance level to confirm the start of a bullish trend to higher prices. If resistance holds, prices are likely to enter a period of consolidation.
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