AUD/USD Price Analysis: Drops sharply from 0.6400 as US Dollar recovers further
25.10.2023, 13:58

AUD/USD Price Analysis: Drops sharply from 0.6400 as US Dollar recovers further

  • AUD/USD found an intense sell-off near 0.6400 after a sticky Australian inflation report.
  • A sticky Australian inflation report has prompted expectations of one more 25 bps interest rate hike from the RBA.
  • The US Dollar strengthens as a recovery in factory activities could escalate hawkish Fed bets.

The AUD/USD pair falls sharply after facing tough barricades near the round-level resistance of 0.6400. The Aussie asset faced a sell-off after the release of the sticky Australian Consumer Price Index (CPI) report for the July-September quarter.

The Australian Bureau of Statistics reported that consumer inflation grew at a higher pace of 1.2% in the third quarter against expectations of 1.1% and 0.8% reading in the April-June quarter. The annual inflation rose by 5.4% against the consensus of 5.3% but slowed from the former reading of 6.0%.

A sticky Australian inflation report has prompted expectations of one more 25 basis points (bps) interest rate hike from the Reserve Bank of Australia (RBA), which would push the Official Cash Rate (OCR) to 4.35%.

The US Dollar strengthens on expectations that recovering US factory activities could escalate hawkish Federal Reserve (Fed) bets.

AUD/USD trades in a Falling Channel chart pattern on a four-hour scale in which each pullback is considered as a selling opportunity by the market participants. The 200-period Exponential Moving Average (EMA) is sloping downside, which indicates that the broader trend is bearish. Major support is plotted from October 3 low at 0.6287.

The Relative Strength Index (RSI) (14) trades in the 40.00-60.000, indicating a consolidation ahead of crucial US economic readings.

A fresh downside would appear if the Aussie asset drops below October 03 low around 0.6286. This would expose the asset to 21 October 2022 low at 0.6212, followed by 13 October 2022 low at 0.6170.

In an alternate scenario, a decisive break above August 15 high around 0.6522 will drive the asset to August 9 high at 0.6571. Breach of the latter will drive the asset towards August 10 high at 0.6616.

AUD/USD four-hour chart

 

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