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Australian dollar dips after softer-than-expected inflation data

The Aussie fell nearly 0.5% and traded near its lowest level in about two weeks, with traders recalibrating expectations for potential rate hikes.

Reported · Written up by our desk · Major Pairs

The Australian dollar slid nearly 0.5% on Wednesday morning after Australian CPI came in softer than expected, with Q2 inflation easing to 3.9% from Q1 and the monthly indicator at 3.8% for June versus a forecast of 4.0%. Action Forex said the weaker print nearly sidelined expectations for rate hikes this year.

Action Forex added that inflation dynamics in other western economies have recently improved, attributing that pattern to a US-Iran ceasefire. It cautioned that renewed hostilities could revive inflationary pressures and change the near term rate outlook.

On the charts, the AUD/USD price fell toward the lowest levels in nearly two weeks and reflected more than 50% retracement of a 0.6865 to 0.7026 recovery leg. Action Forex also pointed to a weakening daily technical picture, including RSI near 42 and momentum sitting around the centerline, alongside attention to a daily close below the 0.6945 retracement level.

Traders are also watching the Fed, with Action Forex noting that the FOMC policy announcement is expected to keep rates unchanged, while the Fed’s stance on near term policy action will be closely monitored. The outlet said a break below 0.6945 could expose downside targets around 0.6926 and a 0.6900 zone.

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